Pay Off Debt With a VA Home Loan
Debt accumulation can happen to the best of us but luckily as a Veteran homeowner, you have an advantage. Your VA home loan program eligibility means you may qualify for an MDCL (Military Debt Consolidation Loan), also known as a VA Consolidation Loan which may help you overcome financial difficulties. With HomePromise, it’s possible to pay off high interest debt with a VA home loan.
Being eligible for VA home loan benefits as a result of your military service is a low-interest rate way of consolidating your debt. VA loans are special because not only can you buy a home with zero down payment, you may be able to get a VA cash-out refinance loan to pay off debt. One big benefit of the VA home loan program is that most of the time, the VA loan limits can be ignored which means you may qualify for a VA loan for $1,000,000, 1,500,000 or even $2,000.000!
Many types of conventional mortgages will only allow a borrower to borrow 70-80% of the home’s value to pay off consumer debt. Plus, if you can’t bring a 20% down payment you’ll be paying monthly mortgage insurance which can be expensive. When considering VA loans, some VA lenders only allow you to tap 90% of your home’s value. The HomePromise Military Debt Consolidation Loan (MDCL) allows you to borrow up to 100% of your home’s current appraised value. Are you interested and wondering if you qualify for an increase in your VA loan amount? Contact our HomePromise VA loan experts today at 800-720-0250.
Does the VA Help With Credit Card Debt?
HomePromise VA borrowers have experienced great relief to their monthly cash flow by paying off debt with a new VA mortgage. A popular option is a VA cash-out refinance which is one of two refinance options offered by the VA. With this type of loan through HomePromise, you may be able to get cash out of your home up to 100% of your home’s equity to pay for anything from funding home improvements to buying a new car and paying off high-interest debt like credit cards.
VA loans, especially cash-out refinances, help with debt because veterans can often get lower rates than consumer debt, potentially saving lots of money. More veterans are getting cash-out refinances on their homes because you may pay off your credit card debt, delinquent taxes or debts with high monthly payments.
Your monthly mortgage payment plus the monthly minimum payments on your credit cards, personal loans, and other forms of credit, count toward your debt ratio. Debt consolidation may be able to lower your monthly payment and improve your debt ratio for the long run.
Is It Smart to Take Out a Loan to Pay a Credit Card Debt?
Consolidating debt may save some veterans a lot of money. This is because your new rate on a VA Cash-Out refinance may be lower than the interest rates on your credit cards or other loans. You can essentially have the same amount of money owed, but pay less each month, and have all your monthly payments in one payment – your new mortgage payment.
Another benefit is when your credit card debt is paid off, the amount of usable credit on each card increases. This credit utilization is important when calculating your credit scores because as your credit utilization goes down, your credit score usually goes up. Whether it is a good idea to pay off credit card debt with a cash-out refinance depends on your personal situation as a veteran or service member. Call HomePromise to talk to a VA loan expert to get your questions answered at 800-720-0250.
The advantage of taking out a VA mortgage loan to pay your credit card debt is that you typically pay a lower interest rate and have lower closing costs than conventional loans. Your interest rate will also usually be much lower than you would pay on credit cards. Also note that VA loans can be paid back over a period of 10, 15, 20, 25 or 30 years. This gives you a wide range of repayment options. Are you ready to find out how to pay off your credit card debts using your VA loan? Talk to a HomePromise VA expert at 800-720-0250.
It may seem unusual to take out a new VA mortgage loan to pay off your credit card debt, But, understand that this is a secured debt while credit card debts are revolving debts. This means that credit cards may carry heavy penalties if you’re late on a payment, the interest on some credit cards can actually go up on the whole balance if you’re late on your monthly payment just a few times. Plus when your credit card balance is close to your spending limit for each credit card, you may cause some damage to your credit score.
Get a VA Loan to Pay off Credit Card Debt
Getting a VA home loan can help you pay off credit card debts, The cash-out from your home’s equity can also be used for many purposes. These purposes include paying off credit cards, funding tuition expenses, making home improvements, or doing home repairs. The application process for a Cash-Out refinance means a bit of a longer process than that of a VA’s Streamline Interest Rate Reduction Refinance Loan (IRRRL) but the benefits are often worth it.
It is important to note that you must meet certain qualifications to qualify as a veteran for a VA loan.
- You have been an active-duty Veteran with a minimum of 90 days of service during wartime,
- You have served in active service for 181 consecutive days during peacetime or
- You’re a surviving spouse of a Veteran.
One great benefit of a VA Cash-Out loan to pay off credit card debt is that your debt-to-income ratio is usually lower after closing. Your debt-to-income ratio refers to the percentage of your gross monthly income that goes towards the minimum payment on your debts. Lenders look at this percentage to assess your ability to manage finances and the likelihood you will be able to repay the mortgage, your income and credit score will also be taken into account during a VA loan process.
Is Paying Off Debt With A VA Loan Right For You?
To relieve the ever-mounting pressure of growing debt as a veteran or active service member, you may qualify to pay off debts using your equity. Using a VA lender specializing in VA loans such as HomePromise can help get your VA loan completed fast. With the extensive knowledge of our VA loan experts to guide you, the process can be easier and quicker.
HomePromise is an approved lender with the US Department of Veterans Affairs. If you’re ready to move forward or just want more information, the first step is to talk to one of our VA experts at 800-720-0250
VA Debt Consolidation Loans & Military Debt Consolidation
Even with the best of intentions, bills can start to pile up. From unexpected medical bills to high interest credit cards, debt can happen to anyone. Other expenses like college tuition, delinquent taxes, and second mortgages can also cause financial stress. For veterans and military families currently experiencing financial difficulties, VA military debt consolidation loans can help.