Mortgage Loan?

The Young family is purchasing a $ 130,000 house with a VA mortgage. The bank is offering them a 25-year mortgage with an interest rate of 9.5%. They have $ 20,000 invested that could be used for a down payment. Since they do not need a down payment, Mr. Young wants to keep the money invested. Mrs. Young believes that they should make a down payment of $ 20,000. a) Determine the total cost of the house with no down payment & b) total cost, if they make a down payment of $ 20,000. c)Mr. Young believes that the $ 20,000 investment will have an annual rate of return of 10% compounded quarterly. Assuming that Mr. Young is right, calculate the value of the investment in 25 years. d) If the Young’s use the $ 20,000 as a down payment, their monthly payments will decrease. Determine the difference of the monthly payments in parts (a) and (b).

My husband and I both qualify for a VA loan. We don’t have the best credit (I’m at 580 ish and he’s about the same). We are working at improving our credit by the time we try to buy our first house next year. I have a few questions:
1) Will improving our score help our intrest rate with a VA loan (I know it will help with everything else)
2)What type of out of pocket costs should we expect?(closing etc.)
3)Will putting money down help our chances at getting a loan?

Any other advice you have I would be great!

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