Pros & Cons of Different Loans

Today I am breaking down the different types of loans associated with purchasing a property, and giving you their pros and cons.
If you are financing your purchase, chances are that you fall in to one of three categories; either a conventional loan, an FHA insured loan or a VA loan.
In a conventional loan, typically it is a 20% down payment, the con in that right of the bat is the fact that if you are purchasing a $400,000 property, that’s $80,000 coming out of your pocket. Not every body has that amount of money but even if you do, you may not necessarily want to put all that upfront to a property that is probably going to need some cosmetic work to begin with. Because of that reason many people choose not to go the conventional route, one of the pros however, your offer is seen as much stronger than the others. The seller, weather it be a bank or an actual person, definitely sees your offer as a lot more trust worthy in the fact that you are putting a significant of money down which seems less likely to back out of the transaction. There is no truth to that, every one has the same option to cancel within the time allowed but for some reason the conventional sticks out. “Money Talks”
For FHA insured loans, the pros are the down payment, and that would be a 3.5% minimum down payment. You can always add more but generally speaking this doesn’t happen very often. Now with that 3.5% you are now on the opposite end of the conventional loan. Your offer seems undependable, you have little invested, you are not seen like an offer that is going to move forward if something were to arise because you may not necessarily have the funds to fix what ever needs to be fixed so that would definitely be a con. Now the pro id you’re putting a minimum amount down which leaves you with enough money in the bank, or if you didn’t have very much to begin with, the ability to purchase a property.
VA loans are in my opinion one of the best loan programs out there. This only applies to individuals who are currently serving or who have served in the armed forces. It is a great program, government insured, so is FHA but VA allows you to go in with 0% down. That is definitely a pro; the con is that you are at the bottom of the pile when it comes to offers.
The reason for that is not only do you have nothing invested in it, the seller required to pay for additional fees which the buyer would other wise be paying for in any other loan program. These are called “non-allowables”. Because of that I’d recommend VA buyers to always offer a bit more to compensate for the additional costs in order to be competitive.