Using your military status and experience to get the best interest rates on a home loan already puts you one step ahead. Making plans to pay off the loan early is another smart move.
You have several options for paying a VA loan off early. You can choose to pay it off in one big lump sum if you experience a financial windfall or have a large amount of money in savings.
You can also choose to make an extra payment a year. This might take more time, but it is more feasible for many homeowners.
Another option is to pay a little more with each monthly payment. If you choose this route, make sure that the extra funds are applied to the principal for the most significant impact on paying down the debt.
However you choose to do it, you’ll enjoy these benefits of choosing to pay off your loan obligations early.
#1 Avoid Paying a Prepayment Penalty
The long-range benefits of your choice for a VA loan are financially rewarding. The VA prohibits lenders from charging a prepayment penalty. Since these penalties can be high, they sometimes deter people from paying off their loan faster.
Saving on this penalty allows you to begin reaping the other benefits of no longer having to pay on a mortgage.
#2 Pay Less Interest On the Loan
Getting the lowest interest rate possible helps you save money during the time that you are paying for your house. Not having to pay the interest entirely provides even more financial benefits.
When you look at how much interest accumulates over a 15 to a 30-year mortgage, the savings become quite clear. After paying off your home, you can earmark the money that you used to spend for other purposes such as investing in your retirement.
#3 Start Saving for Remodeling or a New Home
Many people buy older homes that might need some work after several years. Paying off your loan allows you to redistribute those funds towards a saving plan. This can come in handy if you plan to move soon or know that your house needs some essential repairs.
#4 Feel Confident As a Full Homeowner
Owning a house free and clear feels fantastic. After paying off your debt, you get the satisfaction of knowing that your home is entirely yours. Hitting this financial goal is also personally fulfilling. Not only can paying off a house increase your credit scores, but you’ll also know that you’ve made smart decisions that have a positive impact upon your future.
Home loans for veterans and service members come with many perks. There are also several myths surrounding these loans that can leave you feeling confused.
Although not required by the VA, you can opt to put a down payment on the house to help you pay off the loan earlier.
If you have any questions about your loan repayment options, then let us know. We’ll clear up the myths and help you make decisions that maximize your financial benefits.