Most people have times in their lives when things just aren’t going as planned. Life throws us curveballs or maybe spending got a little out of hand over the last couple months, or years. As a result, balances on credit cards slowly crept up and before you knew it, you were thousands of dollars in debt.
Quite a few active duty service members know this all too well while off on deployment and unable to easily manage their at-home finances. Spending soon begins to go out of control as the spouse tries to keep everything afloat at home. Often times this leads to escalating credit balances. Eventually interest rates and payments increase, while credit scores start to decline. Struggles to make payments lead to calls from debt collectors. Eventually it feels like things have spiraled out of control, all the while putting more and more pressure on everyone.
Clearly that’s an extreme set of circumstances. However it is very realistic for thousands of people in America. If not for being an active duty service member, veteran or even reservist, this could be a very realistic scenario for you as well and like many you would not have many places to turn. You are one of the lucky ones however. A VA debt consolidation loan offers so many benefits and while your house is your home, it is one of the few tools that can really help you towards retirement, by allowing you to get out from under all of the debt that continually rides on your mind and holds you back.
Benefits of a VA Debt Consolidation Loan
Many homeowners are able to utilize this amazing program to not just get creditors off their back but really take control of their life again and start planning towards retirement or when the time comes, have the ability to help their children get a successful start with their lives by paying for college or weddings.
There are so many possibilities but quite simply VA debt consolidation can help homeowners get back on financial track with these helpful features:
- Much easier to qualify than conventional debt consolidation loans
- Long terms offer more savings and financial freedom to tackle all of your debt
- VA loans offer much lower mortgage interest rates
- No monthly mortgage insurance premiums
- Up to 100% loan-to-value, so homeowners can maximize their consolidation power and thus greater monthly savings
- No prepayment penalties
- Mortgage interest may be tax deductible where consumer credit debt may not be
Qualifying for a VA Debt Consolidation Loan
Qualifying for a VA debt consolidation loan is much easier than a conventional debt consolidation loan. Of course it’s a VA refinance guaranteed by Veterans Affairs and because of this, there are more lenient guidelines which allow you to get qualified.
- A lower minimum acceptable credit score, as low as 620
- Higher Debt-to-Income (DTI) guidelines up to 50%
- Higher loan-to-value (LTV) up to 100%
It is possible a VA debt consolidation loan isn’t right for you. However, to be successful with your debt consolidation plans, you mustn’t discount any options until you’ve compared plans and methods.
Provided here is a Debt Consolidation Calculator with the proven methods of debt consolidation. Whether it be the “Snowball Effect” (paying the lowest balances first and applying the payment savings to the next highest balance) or the “Avalanche effect” (paying highest interest debts first), you can use this worksheet to find the method that works the best for you to reach your goal.
Of course the most ideal goal is to have no debt. For most, that’s years away. The next best scenario is one mortgage payment and no debt. If you keep those goals in mind, realizing one will always come before the other, you know you’ll have a level-headed approach to your debt consolidation. Be sure to implement the best method that yields the highest return (greatest monthly savings) and only then will you be on your way to one lower monthly payment and sooner than you think, no payments at all.