I can get a mortgage loan for $0 down, should I invest my money else ware, or should I place a down payment?

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I am in the Army, and am going to use my VA loan. This gives me the ability to get a mortgage loan with $ 0 down. Since I am coming back from deployment soon, I have saved up some extra cash. I am wondering if I should get the VA loan, and just slowly pay of the loan while I invest my extra cash somewhere. I will most likely be in the military for five more years, so I was thinking that’s how long I would like to invest the money, just in case I need it for when I get discharged. I am not sure how to calculate whether I will recieve more money from the principal of my loan paid due to a higher down payment, or whether I will recieve more in some form of investments. If you how any knowledge on this subject please offer your advice. Thanks a lot.

  1. Reply
    January 21, 2011 at 3:56 am

    The more the down payment,the less the interest.

  2. Reply
    January 21, 2011 at 4:02 am

    Making a down payment will reduce your interest and thus your monthly payments. It may reduce the payments enough that you could get a 15 year loan which would be even cheaper over time.

    Have the mortgage company you are dealing with provide you with a payment schedule for loans with and without a down payment. (That will only take them a few minutes and a little bit of paper.) You should also talk to several as interests rates do vary somewhat between institutions.

    Predicting an investment return requires making an assumption about the average rate of return. Which means the answer could vary considerably. The assumption will depend on the amount of risk you want to take. If you are conservative the down payment is probably the best way to go. If you don’t mind taking a risk investing your money might be advantageous.

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