The VA debt consolidation loan is an outstanding tool that veterans can use to their advantage to reduce their monthly debt. These loans provide debt consolidation by allowing you to tap into the equity of your home. As long as you are a qualified veteran, either active duty or honorably discharged, you may qualify for this type of loan. You will need to have some type of equity in your home. Equity is the value of your home minus the mortgage and any other debts you have on it. You can borrow from this area.
There are several ways a veteran can obtain a VA home loan. For example, if you have a traditional, conventional mortgage, you can apply for a conventional to VA loan to help you refinance. If you currently have a VA loan, you can refinance the loan to leverage the equity in your home.
How Much Can You Borrow?
If you need help through a VA debt consolidation loan, you will first need to determine how much money you can borrow. In most cases, you can borrow up to the limit of your home’s value, minus any costs that may be applicable for refinancing. For example, if your home is valued at $150,000 and you owe $50,000 on that home through a mortgage, then you have equity built up to the value of $100,000 which can be used to pay down debts that you have. You will need to qualify for this size of a loan but the regulations are minimal on VA loans in this regard.
Why Should You Use A VA Debt Consolidation Loan?
There are actually several reasons to consider a VA debt consolidation loan. First, most mortgages have very low rates (and rates are falling.) With a VA loan, you are likely to save even more because VA loan rates are often even lower. Therefore, if you borrow through a debt consolidation loan at 6 to 8 percent interest, you are likely to be able to pay off your high interest rate credit cards (between 15 and 30 percent) instantly. This difference offers an opportunity for incredible savings to you.
Can You Afford It?
The next question to ask yourself is can you afford to consolidate your debt. You should take the time to determine if you can afford the monthly payment that the VA debt consolidation home loan will tack onto your monthly payments. Remember to remove the debts you are paying off. For example, when you consolidate, you are likely paying down your debts with the new loan. This means that you will not have to make monthly payments on those debts. Finally, ask yourself if you can afford not to consider debt consolidation, especially if your interest rates are high.
The key to securing a VA debt consolidation loan is to know what your home is worth. You can do this through the help of professionals who are able to tell you what your next step is.
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