By Amanda Rebmann

I’ve written several articles about the VA Mortgage, an area I have a good knowledge base in from having worked in the mortgage industry for almost 15 years.  I’ve originated mortgages and serviced them, which gives me a comprehensive appreciation for what will be for most people, their biggest monetary investment.  However, I’ve never been on the other side- the one getting the loan- until now.

For my husband and me, it just never made sense to actually purchase a home.  Before he went active duty, we were pretty young and our income wasn’t stable.  Since then, we moved around so much, we decided it was best to keep renting.  And, after the housing bubble collapsed, I was always worried we would take a loss on any purchase.

But now, with a daughter and a more permanent home base, it was finally time to take that step.  I wondered how it would feel on the other side of the equation.  I figured with my experience, I’d be all set.

A little lesson brought me back down to earth.

We’re looking for a single family house in a very competitive market- seriously, ridiculous purchase prices for tiny homes built in the 50’s.  We decided early on to limit the mortgage payment to no higher than his basic allowance for housing (BAH) so that we would never have to rely on my income to make the mortgage payment.  This is a good idea for us for family planning purposes.  It also gave us a very definitive ceiling amount.

For simplicity sake- let’s say we determined we wanted to pay no higher than $2000 a month for the loan payment.  This amount will also include taxes and insurance as VA loans will require an escrow account for these items.  I jumped online, pulled up a random VA loan calculator, and determined how large the loan amount would be to stay at or below that amount.  With that figure in mind, we met with our realtor and started hunting.

It wasn’t until the end that the realtor mentioned shopping the loan around a bit, to ensure we would receive the best rate possible.  When I plugged current rates into the loan calculator- I was amazed at the difference.  I had forgotten just how much of a lower rate could allow you to mortgage. 

It’s important to also remember there are ways to get that rate lower, to further lower your monthly payment.  Points may be paid at closing to receive a lower rate.  The good news is that your deal may be structured to have the seller pay for some or all of those points.  VA loans allow up the seller to pay for up to 4% of the purchase price of the loan in seller-paid closing costs.  For example, on a $200,000 loan, the seller can credit you up to $8000 to be used for many of the costs associated with closing a real estate deal.  In other words, the seller paid closing costs can help you lower your rate.

Shop around when looking for a mortgage.  In a transaction this large, a little competition can save you thousands of dollars, and may get you closer to moving into a house you love.