In order to make the life of military personnel as easy and comfortable as possible, various types of loan facilities and special regulations are available for active duty members as well as for veterans and their families.
The most popular loans for military personnel are the Veteran Administration ones – the VA loans. The VA program has been used for a long time, and has proven extremely successful and popular, with over 18 million VA home loans being taken over the years. Since its original creation, in 1944, the program has been constantly expanded and improved, so that more and more people can now benefit from its special terms.
One of the most important things you have to understand about the VA loan is that they are not provided directly by the government. This is the most common misconception, and even some people who’ve used such as loan before seem to believe it was provided by the government. In fact, the government only guarantees the unsecured personal loan, which is supplied by a private institution. Therefore, terms and conditions may vary from one lender to another, and it’s always worth checking all the possibilities before entering a deal.
Typically, a funding fee will also be required, unless the person applying for the loan is specifically exempt from paying such fees (for instance, veterans who receive at least 10% disability compensation).
The goal of the program is to provide military personnel with an easy and reliable funding source for a mortgage. The structure of the loan and the down payment required vary depending on the type of veteran as well; for example, the down payment may vary from nothing at all up to 10%.
In case of refinancing, if a VA loan is refinanced into another VA loan (a case known as IRRRL refinance), the amount borrowed may reach up to 100.5% of the total loan, which is considerably higher than what most refinancing options available on the market allow today.
Other Loan Facilities for Military Personnel
In addition to the VA loans, there are other facilities available for military personnel as well. For example, a federal act has established that the maximum interest rates that can be charged on payday loans granted to active duty members should be 36%. The same act also forbids the use of checks or access to bank accounts for such transaction.
While payday loans are otherwise regulated at state level, this measure was implemented on a federal level after noticing that shark lenders targeted military personnel more frequently than other categories. At the time when the bill was passed, the Department of Defense described payday loans as “predatory”, so, if you’re considering getting one, you should always double-check other options before applying.
Last but not least, remember that there are many counseling services designed especially to help military personnel with making the best financial decisions. If you’re not sure which way to go, check the resources available before taking any steps, in order to insure a safe and stable financial future for your family.