A portion of each mortgage payment is deposited in the escrow account, and the necessary payments are made from that account. Will you be able to afford the typical increases in taxes and insurance?įirst, a lesson in escrow: An escrow account is set up by a mortgage lender to pay property-related expenses like hazard insurance and property taxes. This is especially true if the home's value has decreased because the market has changed. If you need to sell your home within a handful of years, this could mean you'll be putting more cash into the sale of the home than you're likely to get out of the sale. Why? Putting no money down means you have no equity in the home when you first take ownership. If you're currently serving and there's a chance you could be redeployed within the next three years, you may want to be cautious about choosing a $0 down VA loan. Are you likely to move or be redeployed within three years? Don't exhaust your emergency fund to make the down payment.Ģ. However, you should make sure that you won't hurt your overall financial situation with this option. If you can afford the 20% down payment, you can avoid PMI and reduce the VA funding fee.You can include a down payment with your VA-backed mortgage to help, but you'll still need to pay the funding fee, unless you're exempt.
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