Mortgage Question

[Anonymous]

Hey Yall,

quick question. We are in line to get a VA 30 year mortgage loan, but are thinking about going for 20 years instead. Is there a difference between getting a 20 year VA loan and getting a 30 year VA loan and pay it like it is a 20 year loan? 

[CreditInspired]

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@Anonymous wrote:

Hey Yall,

quick question. We are in line to get a VA 30 year mortgage loan, but are thinking about going for 20 years instead. Is there a difference between getting a 20 year VA loan and getting a 30 year VA loan and pay it like it is a 20 year loan? 

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The interest rate on a 20-year mortgage will be less. However, paying a 30-yr as if it was a 20-yr not only gives you leverage, but you'll have it paid off at the same time too.

Example: If you have a 20-yr mortgage and need some breathing room for a month or two down the road, that's too bad. However, if you have a 30-yr mortgage but are making monthly payments as if it was a 20-yr mortgage and run into a financial bind down the road, you just revert back to not making extra monthly payments again until you're out of the bind. 

So, if I were in your shoes, I would go for the 30-yr and pay it as if it's a 20-yr, especially if you can afford to do so. 

[NC_Mtg_Loaner]

I would merely add to Credit Inspired's comment that all you reallly need to do is to look and compare the amortization schedules for each loan.

Depending upon the loan amount (principle balance being financed) and your personal financial goals, not to mention the difference in rates you are quoted you might not see too much difference in monthly payment, but be sure to check on that and be certain that you are cozy with whichever payment schedule you select.

[VALoanMaster]

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@Anonymous wrote:

Hey Yall,

quick question. We are in line to get a VA 30 year mortgage loan, but are thinking about going for 20 years instead. Is there a difference between getting a 20 year VA loan and getting a 30 year VA loan and pay it like it is a 20 year loan? 

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Hi UTSAMarineVet09,

I tell my clients to at least consider doing exactly what you're talking about.

The issue is once you take out that 20 year loan, you're committed to that 20 year payment. If somethings happens & money is tight for a month or more, you don't really have any options. On the other hand, if you take out the 30 year loan, you can always pay extra but if things get tight, you can drop back to the 30 year payment. 

Even if the rate on the 30 year loan is slightly higher, it maybe worth it just to have that flexibility.