Mortgage Advice

Definitely go with the lower rate. You'll pay off the difference in less than 2 years.

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looks like your loan amount is around $157k

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You are right. It's 158k. I will ask again. I am using Regions Bank for my mortgage. Do you work in the business?

Its correct. They pay more closing cost if I take the higher rate or less closing cost if I take the lower rate.

With all due respect, I think you are incorrect.

Assuming OP provided info is accurate, his scenario is this-

Est $158,000 loan.

His interest rate of 3.875% is being offered to him at 100.5 That's a 0.5% lender credit in his favor. Furthermore, 4% is being offered at 100.625. That's a 0.625% lender credit in his favor.

158k x .5 % = $790
158k x .625 % = $987

It's likely his rate of 3.75% would be offered at 99.75 or 99.625 etc. In that scenario, he would "pay the points" to get to 100.00 pricing. However, his longterm rate would be lower once he recoups that in hopefully the soonest time possible.

Yes. I am in the business.

No. I will not try and pull you from Regions :)

See my response above to Bacchus. Is what I said accurate?

My first response would be to not get a VA loan if you qualify for a Conventional loan?

VA loans cost more in closing costs generally and additionally your rates are higher. VA loans are good in that they often times allow you to buy a house with less money down, but you are paying for that in interest rates and often times they allow people to buy houses that they should not be buying.

There are way too many military and ex-military that hear nothing but "VA loan, VA loan, VA loan" their whole military life and don't even look into the options. They have their place certainly, but often times you are better off going conventional.

I would always go with the lower interest rate especially if you are able to pay off the difference in under 2 years. 3 years is generally the absolute minimum you should be looking to own a house as that's the average break even period for buying vs renting.

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VA rates are (almost) always lower than conventional rates. I haven't seen conventional rates lower than VA in several years.

Specifically, if someone has less than perfect credit. VA loans, for interest rate purposes, would be way more forgiving than conventional.

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I stand corrected then and apologize. I hadn't compared them in 3-4 years. My local Credit Union is still offering 3.875% 30 years though but generally it appears you are correct.

I still stand by the fact that if you can't afford a conventional loan don't buy the house. If you have poor credit and can't put 20% down like many with VA loans look to do, you are putting yourself in a very bad financial position. I've seen it over and over with my military friends. They want to buy a house and VA loans allow them to when they couldn't touch the houses with conventional loans.

If you can't afford a conventional loan on the property, my recommendation is to really think long and hard on whether you should be buying the house. If you can and the VA loan is the better deal, certainly go for it.

No need to apologize at all. Generally speaking, I agree with you. If you can afford a 20% down payment with excellent credit then conventional is a great way to go.

It's definitely sound advice but the reality is about 70% of homes each year are purchased putting less than 20% down.

I would only do about 3 or 4 loans a month if I was closing only conventional loans with 20% down. Fortunately, I close significantly more than 4 per month because of FHA, VA and conventional loans with 5-15% down.

SomethingLikeA do you mind if i ask who you work for ? If you don't want to disclose I completely understand. I have not shopped around for my mortgage because I scared I will get denied last minute with Regions if they see I shopped after they pre approved me. I wonder if i got the best deal available. I ended up taking the 3.875 instead of the 4 percent