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VA vs Physician vs Conventional loan

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  • VA vs Physician vs Conventional loan

    Military resident finishing up and moving this summer. Hoping to get about $100k profit/equity once done with selling/fees on our current home in San Diego. Will be buying something approximately $400k in the Central Valley of CA where we plan to live for only 4 years to complete military obligation with a 15 year loan. Need to buy given our numerous animals/horses. Husband is very handy (also a physician) and we will likely do some major improvements as our plan would be to pay off as much as possible in our 4 years and take the money/equity from that when we sell to put down on our "dream home" when we move to Idaho in 4 years. VA loan seems like it may be best given low interest rate, but seeing as we could afford a down payment easily, would another option be best to avoid fees such as VA funding fee? Just not sure what type of loan to pursue for lowest overall fees and interest if just keeping it for 4 years but trying to have a bunch of it paid off. Thanks!

  • #2
    Any harm in renting during the four year stint in the Central Valley? If this is Lemoore, I don't know if I'd be in a rush to buy there.

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    • #3
      We just can't find anything that suits our needs with horses to rent. Also, my husband loves fixers and we feel we can get some equity from that in the few years we are there.

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      • #4
        Since you're still active duty, you presumably don't have a VA rating and therefore would pay an origination fee for a VA loan.

        $400K is under the county VA limit, so look at both VA and doctor loans. May also want to look into ag loans or possible agricultural zoning and subsidies depending on what you have besides horses.

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        • #5
          If your husband had had any medical issues that will result in any type of disability rating, he should apply through the VA for that rating to be applied. He won't get any disability pay, but will open up an origination free loan.

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          • #6
            Originally posted by bmkramer View Post
            Military resident finishing up and moving this summer. Hoping to get about $100k profit/equity once done with selling/fees on our current home in San Diego. Will be buying something approximately $400k in the Central Valley of CA where we plan to live for only 4 years to complete military obligation with a 15 year loan. Need to buy given our numerous animals/horses. Husband is very handy (also a physician) and we will likely do some major improvements as our plan would be to pay off as much as possible in our 4 years and take the money/equity from that when we sell to put down on our "dream home" when we move to Idaho in 4 years. VA loan seems like it may be best given low interest rate, but seeing as we could afford a down payment easily, would another option be best to avoid fees such as VA funding fee? Just not sure what type of loan to pursue for lowest overall fees and interest if just keeping it for 4 years but trying to have a bunch of it paid off. Thanks!
            im assuming your SD property is near the base.....SD is amazing....and prop 13.....
            i would think very carefully/strongly of becoming a long distance landlord for that location....and im never on board for any land lording....

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            • #7
              GREAT questions and seems like your sweat equity strategy will likely help you maximize the down payment for your eventual dream home.

              I would recommend you get a total cost analysis that shows you the TOTAL cost of several loan options based on the four years you plan to be in the home.

              As you well know, VA has a huge funding fee; 1.75% or 2.15% depending on if you have used your VA eligibility in the past. It would be best to avoid this, if possible. I think you could get away with a 5 to 10% down payment on a physician loan, avoiding that funding fee and likely having significantly less cost over the four years.

              Last edited by Peds; 02-04-2020, 01:13 PM. Reason: Violation Rule #2
              Josh Mettle, Director of Physician Lending at Fairway Independent Mortgage Corporation | [email protected]

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              • #8
                Agree with others, you will need to analyze/assess the total cost between the options. My suggestion/opinion; if you are truly only planning to be in the home 4 years, there may be some financial benefit (lower interest rate) of going with a 5 to 7 years ARM versus a 15 years fixed rate loan.

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