6 Ways To Save On A VA Loan

6 Keys To Saving Money On Your VA LoanReduce the costs of a VA loan Posted on: May 30, 2018 Every home buyer wants to save money on their mortgage. With all the expenses associated with buying a home, removing just a few costs or fees can end up saving you a lot of money up front or in the long run.Because VA loans are unique, there are specific ways you can save money with the mortgage program that you can’t with others. Depending on your current financial needs, you can either reduce your costs at closing or cut your expected monthly payments, saving you money over the course of the mortgage.Here are some of the things to know to save money on your VA loan:Make a larger downpayment…or dont make one at allIf your goal is to save money on your monthly payments, then a larger downpayment is the way to go. The more you put down, the lower your monthly payments will be. This is because your downpayment goes toward the principal of the house, so the built-up interest costs over the course of the mortgage will be lower.But not all home buyers want to make a larger downpayment, and some aren’t able to at all. The other option is to make a smaller downpayment – or no downpayment at all. VA loans don’t require a downpayment, but you’re going to end up paying more on your monthly payments.Whether you choose to save money upfront or over the course of the mortgage depends entirely on your unique financial situation.Click to check VA rates.Have the seller cover closing costsHaving seller cover some of your closing costs isn’t unique to VA loans. These are called concessions, and both parties can agree that the current homeowner covers some of the costs. The goal is to make the process easier for both parties, making the sale go faster.You can’t have the homeowner cover every cost at closing, but they can cover your VA funding fee, tax prepayments and discount points. They can also agree to leave appliances like a refrigerator or dishwasher in the house, essentially making it part of the home sale.With a VA loan, total concessions are not allowed to exceed four percent of the total home value. But when you’re purchasing a home and getting a loan for $250,000, four percent is $10,000. That’s a sizable saving.Pay discount pointsVA loans already have the lowest mortgage rates, but there’s a way to get even an even lower mortgage rate.Discounts points are an additional fee you can pay at closing. By paying the fee, your lender will reduce your mortgage rate by a set amount. You’re essentially paying some of the interest upfront so your lender will reduce your rate to match what you’ve paid. Also, discount points can be tax-deductible, saving you money when April comes around.Discount points are entirely optional, but if you have enough cash on hand, you can end up saving a decent amount over the life of the loan. Ask your VA lender how much you can save by paying one discount point before deciding whether or not to pay.Make an extra paymentYou’re allowed to make extra payments on your mortgage. This is usually the same as making a 13th monthly payment on your loan, and it helps reduce the cost of any future monthly payments. Extra payments can usually be done at any time while your mortgage is alive, so if you come into some extra cash, it’s not a bad way to save on your VA loan.Before you make an extra payment, check with your lender to make sure you won’t incur any penalties.Check current VA mortgage rates.Finance your funding feeThe VA funding fee is a flat fee that you have to pay at closing. Funding fees range depending on how large your downpayment is, if you were active duty or national guard, how many time you’ve used a VA loan and what type of loan program you’re using through the VA.As an example, a first time home buying veteran making a downpayment worth 10% of the home will pay a funding fee worth 1.25% of the loan.For VA home buyers that dont want to pay the fee, there is the option to finance it at closing. This will roll the fee into your mortgage, saving you money upfront. However, this will also increase your monthly payments. Like choosing the size of your downpayment, the choice depends on your personal situation.Refinance to lower your mortgage rateIf you already have a VA loan, there’s a chance that you can save money through an IRRRL. The IRRRL is a VA refinance that is designed specifically to reduce the mortgage rate on your loan.Unlike the VA loan, IRRRLs don’t require a new VA appraisal, and the process tends to go quicker than the home buying process. It’s an excellent way to save money – however, to be eligible you do need to be able to get a lower mortgage rate than you currently have.The VA loan is complex, but there are many ways to save money both upfront and over the life of the loan, even if you already have a VA loan.Check todays VA refinance rates.

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