We’re approaching a new year, and we all know what that means for our military pay – it’s time for a raise! It will be the biggest raise in 20 years if Congress approves the 4.6% increase.
Before you break out any questionable celebratory dance moves over all the things you’re going to buy, let’s talk about the gains you could have if your extra dollars start to work for you.
(And, if you plan it right, you can probably buy all the things too.)
We are in real estate, so naturally, we are going to suggest real-estate-y solutions to your financial problems but hear us out.
What if instead of spending your pay raise on more single-edition bourbon and expensive TV soundbars – or impulse ordering peel-and-stick wallpaper and organic everything – you took a stab at paying down the principal on your home loan?
Unpopular opinion? Maybe. Still with us? Hopefully. Let’s dive in.
Pay extra on your loan, save thousands
Paying more towards the principal on your home loan can take years off your mortgage, meaning more equity and money in your pocket when it’s time to sell.
It’s common practice when buying a house in the military to only pay the minimum payment on your mortgage, but contributing just a little more each month can really pay off BIG.
For example, when you make an additional payment per year on a 30-year fixed rate mortgage, you can knock almost seven years off of your VA loan. And just like that, you’re suddenly a whole lot closer to paying off your house.
So how much of a difference could your pay raise make on the lifespan of your home loan? Take a look at these examples in the chart below:
There are a few different ways of paying additional principal. You can make bi-weekly payments (13 payments a year instead of 12), manually pay more each month through your mortgage company, or make a single large payment.
To figure out what this could look like for you, check out the projected military pay scale here and use WeVett Home Loan’s mortgage calculator with your current home loan numbers.
So, while we agree your 2023 military pay raise can make for a nice lifestyle bump, don’t rule out the longer-term gains paying off your VA loan early will bring – plus you can give yourself a high-five for your great financial prowess!
If you’re still with us, but have more questions, contact a VA home loan expert from WeVett Home Loans at (316) 669-5272. WeVett Home Loans is made up of former military and specializes in helping Active Duty make strong financial decisions at every PCS.
You can also reach out to our sister company, WeVett Realty’s real estate team at hello@wevett.com to discuss!
