Veterans are provided with a wide range of beneficial loan arrangements throughout and after their active service. Unfortunately, not all of these end up being financially positive for veterans, as NPR recently demonstrated – for many veterans, their loans can end up leaving them out of pocket. With the system designed to help give war heroes the best level of support available to help them settle down after duty, this is obviously not how the system is meant to work. For veterans to ensure they get the best possible deal, it’s important that they look at a range of factors before selecting a loan.
How Veterans can avoid pitfalls and have good finance
The basics
Veterans are eligible to apply for loans from a range of sources, including banks and via a VA hero program. The latter is a system where loans are offered at preferential rates and backed by the Veteran Affairs department, meaning that veterans can enjoy finances provided at rates that they might not otherwise have access to, owing to a gap in their credit history or lower levels of personal finances. According to the VA, over 1 million home loans specifically have been guaranteed in this nature over the past year, demonstrating the reach of the scheme. However, in order to make sure that this really is a good deal, veterans must take an extra level of assurance when securing their finance.
Enjoying better rates
Because the loans are guaranteed by the VA, some lenders are more willing to lower interest rates. Unfortunately, the converse is also true, and what NPR found was that lenders were using the fact that they would not experience defaults to charge higher levels of interest. The key to avoiding this is ringing around. Veterans should look for experienced financial help via a financial assistant, and make sure that they shop around before settling on any given finance line. While the VA system is designed towards fairness for veterans, unscrupulous lenders will always look to make a profit regardless.
Making the most
Just as you should shop around when looking for a loan, you should stay smart about refinancing in the future. According to Forbes, the VA loan refinancing system is one of the most simple and effective around, and can help veterans to quickly and cheaply find new finance or refinance their existing loans. A word of warning – for many VA loans, refinancing involves the repayment of fees such as the funding fee, which is to mitigate taxpayer risk as there are no downpayments. It’s worth making sure that your financial situation is in order before looking to refinance, as you can end up out of pocket at a time when you are taking refinancing, and often extra risk.
VA loans should be simple, but they’re not. Too many veterans have been stung by poor rates and poor quality deals after going in without thinking about the terms and consequences ahead of time. Taking time to make the most of the benefit, and establishing the best deal for your circumstances, will save headaches in the future.
