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Paying your VA Loan Off Sooner

By: Grant Moon 01/07/13 08:00 pm

Paying your VA Loan Off Sooner

VA home loans are made by VA lenders with loan terms from 10 to 30 years in five year increments.  A VA lender can offer a 10 year loan, 15, 20, 25 or 30 year VA mortgage.  Payments on VA home loans are typically made on the first of each and every month and each payment contains a portion to be applied to the outstanding loan balance, or the principal, and an amount due the lender in the form of interest.

Monthly payments will vary based upon the term of the loans and the longer the loan term the lower the monthly payment.  For example, A 30 year VA home loan on a $300,000 loan at 3.50 percent yields a $1,347 monthly payment.  A 15 year loan under the same terms provides a $2,144 payment.  But can you make a payment every other week instead of once per month?

Sort of.  So-called biweekly mortgage plans collect a monthly payment from the VA borrower every other week.  This extra amount is applied to the outstanding principal balance, paying down the VA home loan in a shorter time, saving on long term interest.  And while a biweekly mortgage plan will occasionally get some extra press every now and then there’s no need to set up a biweekly mortgage when you can provide the same result on your own.

A biweekly mortgage collects 13 months’ worth of payments and applies those payments over a 12 month period.  But if the VA borrower makes a small extra payment on the first of each month the result will be nearly identical.

For example, take that $1,347 monthly payment and divide it by 12 (months).  The result is $112.  By making an additional $112 payment on the first of every month you will save interest in the very same manner a biweekly mortgage program does.  Only you get to do it yourself without the assistance of any outside party.  If you’ve ever considered signing up for a biweekly mortgage, there’s no need to; you can do it on your own.

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