Is a small down payment on a house purchase better than no down.?

Question

7K would be what we can put down vs. a no down deal (plan) or anyone else's offer? Plus we want to use our VA loan. This is going to take place spring this coming year.

Answer 1

There are pros and cons concerning whether or not to put money down on the purchase of a home.

If you go with no money down, you can save what you would have put down in a money market account or other investment just in case you have trouble making your monthly payments later and that money can be used as backup funds, or the money can be used for moving expenses and/or furnishing the home.  

Although the 7K is a small down payment, it may help you to qualify.  It will not substantially help you as far as reducing your monthly payments, but it may save you four or five dollars per month.  Since it is a down payment, it may also help determine a better interest rate than if you went with no money down.

Your VA option is a great one.  You can purchase a home with no money down and no closing costs while getting a competitive interest rate.  Check with your state, too.  Most states have programs that offer good options for veterans who want to buy homes.

Answer 2

VA home loans are a unique way of extending support to the US war veterans, who committed their lives in safeguarding the interests of the country. Therefore, understanding these loans is beneficial.  VA housing loan program provides financial assistance to veterans so that they can purchase home at a favorable rate of interest and convenient loan terms. Loans provided by the VA are fixed interest mortgage loan that do not require any down payment. These loans are provided to all eligible veterans, regardless of their age, color, race, s*x, religion, familial status, nationality or handicap.

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No prepayment penalties and long amortization terms are another advantage of these loans. Houses provided under VA housing loan programs are duly inspected at the time of construction and require a warranty from the builder. The foremost step is to locate a suitable property in a safe locality. Next, the veteran has to go to a lender and apply for a home loan. VA guaranteed loans are provided by private lenders that include banks, mortgage companies and savings and loan associations. No prepayment penalties and long amortization terms are another advantage of these loans.  

Answer 3

You may not have the option to do a no down payment loan. Those are drying up real fast.

Answer 4

Yes, any down payment is better than none.  For starters it will lower the amount of your mortgage.  Also if you have less than 20% equity in your home, you will be required to pay personal mortgage insurance which will add to your monthly payments.  Anything you can put down will help you to reach the 20% equity faster and get the PMI off.  

Don't forget to ask how much closing costs will be in advance.  You may need to use some of your 7K to pay those, but feel free to negotiate the fees.  

Answer 5

Buying anything on credit is never good.  You have to pay a lot of interest, and your principal hardly goes down in the beginning, as most of your payment goes to cover the interest.

Save up some money, put down as much down payment as possible, and owe as little money as possible to the banks.  This way, your monthly payment will be very little, and you can save the money that you would've otherwise lost to the banks.

This is simple math that everybody should understand.  Though I don't know why Americans love their credits even though it's actually hurting their pockets.