If you’re preparing to buy a home using your VA entitlement, one of the first things you want to do is contact a VA loan officer to find out how much you might qualify for. This is done by comparing your current and future debt load with your existing gross monthly income. Sometimes however you want to buy a bigger house but the monthly payment is holding you back. Or you can qualify easily based upon your current income but you want to get your payment as low as possible. How?
The first way is make sure you get the longest available loan term for your VA fixed rate mortgage. For example, you may want a 15 year fixed rate loan but the payments can be one and a half times greater than a similar loan amount spread out over 30 years. Always compare monthly payments using a 10, 15, 20, 25 and 30 year term. The longer the term, the lower the payment.
You can also lower your payment by lowering your rate. After you shop for a mortgage and find a qualified VA lender, explore lower rate choices by paying discount points. A discount point, or simply “point” is one percent of a loan amount and by paying a point you can lower your rate by about one-quarter of one percent. Paying two points, lowers your rate typically by one-half percent on a 30 year mortgage.
Finally, pay down your mortgage. To lower your monthly payment, lower the loan amount. In fact, you can use any of these three combinations of rate lowering maneuvers to get the lowest monthly payment possible on your loan. After all, you’ll be making the monthly payments on the note, so get a payment you feel comfortable with.