Military Debt Consolidation Loans

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Dan Steadman

Financial Advisor, DCL

Military Debt Consolidation Loans

There are special recognitions given by many institutions to those who wore the uniform and served our country. These recognition ranges from substantial services like financial instruments that are dedicated to those who are on active duty or those who have served before; and there are those small discounts from retail establishments and restaurants. These services are a great way of showing our appreciation to those who have served in our place to protect our country and its interests.

When you offer your body to the service of your country, sadly, there are those who do not make it back home whole, there are some who do not make it home at all. These are the cases that leave your loved ones in a dire situation, especially if it were the sole bread winner in the family.

Here are some services that are some reputable institutions dedicated to helping our military and veterans, and their family in their time of need:

Mortgage Lender

Veterans United Home Loans

This company is the largest VA provider in the US where those who qualify can obtain loans from $150,000 to $725,000 for hybrid mortgage or fixed rates. Not only is this the best mortgage provider, it has also earned a triple A+ rating from the Better Business Bureau which makes it one of the best choice for veterans.

New Day USA

New Day USA offers refinancing for the mortgage needs of veterans and their family members. They offer free VA appraisal that is usually priced at $500, and they can give loans up to 100 percent value of the home. Borrowers can also opt for the credit card debt consolidation to help them with other debts. The company takes into account the entire financial profile of the borrower and not just the FICO scores in making their decisions for lending, which allows even those with less than perfect score to qualify.

Federal Housing Administration (FHA)

This is another alternative to Veterans Administration Loans or Federal Housing Loans for veterans who are looking for options in financing their homes. Since the other options specialize on assisting the active military members to acquire affordable home loans, FHA is the best option for those veterans who need to reestablish eligibility with VA. For a 3.5 percent down payment, they get to have the loan service they need. This stands in contrast to the VA, which has an additional fee ranging from 0.5 to 3.3 percent.

Credit Unions / Banks

USAA

Veterans, military personnel, and eligible family members can get financial services from the most prominent Credit Union around.

Navy Federal Credit Union

Navy Federal Credit Union is open to all those in active duty, military personnel, veterans, and eligible family members; despite the name. Their services are available for those who are in the Army, Marines, Air Force, and the Coast Guard, and not just the Navy. Their auto loans can go as low as 1.49 percent and their mortgages can go as low as 3.361 percent depending on individual circumstances.

 

Personal Loans

Omni Financial Military Loans

Omni Financial Military Loans offer application online and personal application where eligible borrowers for personal loans can get approval for a $500 loan to a $10,000 loan. Military personnel can apply online or through one of their brick-and-mortar store fronts. Those that are stationed overseas can still take advantage of their services by filling out their online application. Those who get qualified to get a personal loan have the options to get the funds through a direct deposit to their bank, pick up a check, or get on online prepaid virtual Visa card.

Pioneer Services

This is another lending option for our bothers in arms looking for personal loans. All the borrower needs to do is to process the online application form or apply for the loan through the phone. During this process, they are evaluated based on their proprietary Military Score. Once qualified, they can choose from several loan options like personal loans, bereavement loans, disaster relief, and convalescent leaves.

Lending Club

This is an option that is available to the general public and can be accessed online. Even though the Lending Club caters to everyone, military personnel have distinct advantage due to the information included in the prospective borrower’s personal and financial profile. The only requirement for borrowers is to have at least a FICO score of 640 to qualify for the LendingClub loans.

Business Loans

Small Business Administration (SBA) Patriot Express Loan Program

The Patriot Express Loan Program is a collaboration instituted by the Small Business Administration with banks and lending facilities across the country. Borrowers who get approved for this loan can get as much as $500,000, and funds can be used for endeavors like starting a business or any business-related real estate acquisitions.

Military Debt Consolidation Loans for Veterans

The transition to civilian life from the military can bring some financial challenges during the first few years as you try to establish a more stable outlook. This could be a very trying time, but veterans have no need to fret because there are specialized tools designed to help them as they strive through this challenge. Here are some points to explain Military Debt Consolidation Loans, and give you a better idea for a more informed decision:

A Military Debt Consolidation Loan (MDCL) is a home equity loan

This means this is a secure loan that will allow you to borrow the amount of your home.

You must have a VA home loan in order to qualify

This is sort of a second mortgage that is especially for Veterans because you need to have a previous home loan to qualify. If you purchased your home without going through VA, you will be deemed not eligible for this option.

An MDCL is a “cash-out” loan on your home

Since you are borrowing from the equity of your home, your cash out will be the total value of your house minus the mortgage balance. For example, if your home costs $120,000, and you still have $80,000 left to pay, MDCL will give you a net cash out of $40,000 to pay off your other debts like your credit card purchases.

You will have to pay closing costs

Borrowers are required to close the loans when modifying or refinancing to take out a second mortgage. It usually costs 1 percent to 5 percent, and whatever this cost may be, MDCL will cover that amount for the new loan.

A MDCL is not a loan issued by the VA

The VA does not issue the loan, they simply guarantee 25 percent of the loan to allow veterans get loans on a much lower rate. There are private financial institutions that issue the loans much like any civilian loan and not the VA.

An MDCL increases your financial risk

Members who are in active service are offered a service that includes protection against foreclosure when they are unable to meet payments since they are deployed. This is a one of the key financial protections provided by the Service Members Civil Relief Act. Veterans are not eligible for the same protection since this is only offered to those who are deployed. This is why it is all the more important to look for the best option for your loan.

The MDCL will increase your monthly payments

Do not get shocked when you see your monthly bill since the MDCL loan payments will be slightly higher than your VA mortgage since the financed amount is bigger. Just remember, you have already consolidated all your loans and obligations and you have nothing left to cover.

Market conditions matter

MDCL is still based on current market conditions and will impact the rate you will receive on your loan. Current condition can affect your loan rate but your VA can help get you a much lower package. Watch the market when looking into getting a loan, if you apply when the rates are high, and then you will get a higher rate and you will have to pay a little bit more.

If you don’t have equity, an MDCL won’t work

Like what we have discussed in the first point, if there is no home to get equity from, then there cannot be any loan. The same goes with the total value of your home and the amount of loan you want to get approved for; you need to have that significant amount to match the amount of loan you want to get.

An MDCL is not your only option

If you think MDCL is not the best option since you do not have that much equity, you can go for other options like a debt management program that will help you find other options. There are institutions out there that can provide certified credit counseling that will allow you to consolidate your debt without borrowing.

What Options are Available to Military Members Struggling with Personal Debt?

If you are a member of the military, you understand the challenges of making ends meet on a tight budget and with all kinds of obstacles in the way. The financial problems that military families face are unique, especially in light of how difficult it can be for military spouses to find full-time employment. While it can be frustrating and scary to find yourself saddled with personal debt, there are resources available to members of the military to help you figure a way out of this problem.

One of the fastest ways to get a handle on your finances is to think about debt consolidation through a personal loan. What this option allows you to do is consolidate all of your existing debt into one lump sum. You make a monthly payment on this loan just like you would for any other personal loan. Many military members find that it is much easier to keep an eye on their finances with a single loan to pay down.

What are the Necessary Steps to Consolidate Your Debt?

One of the very first things you should do to make sure that you are making a sound decision is to account for all of your monthly debt and the interest rates that you are paying for each obligation. After that, you should request a copy of your credit score so that you can find out the information that financial institutions will use in considering whether to grant you a personal loan. If you find out that your credit score is lower than what you would have hoped for, you can always work with a debt consolidation service to find out non-traditional options that may be available to you. Remember that these services may charge a fee for their assistance.

The next thing you need to do is to shop around for the best interest rate for your personal loan. Military members have access to financial institutions that other civilians may not be able to take advantage of, such as USAA and Navy Federal. Often times, these institutions are able to offer a more competitive interest rate than what you would find at a typical bank. To find out whether you would actually be saving money by consolidating your personal debt, experiment with the debt consolidation calculators available online.

Why is Debt Consolidation Better than Filing for Bankruptcy?

Debt consolidation is best viewed as a tool to prevent you from having to file for personal bankruptcy. It is a way to accelerate your payment schedule so that you can get on the right financial course. Bankruptcy should only be considered as a way to fight imminent legal action against you. There are lasting consequences for your personal credit in filing for bankruptcy. You may need to consult with an attorney or accountant if you are concerned that filing bankruptcy is the best option available to you.

Dan Steadman

Dan Steadman

Financial Advisor, DCL

Dan is one of the top financial experts when it comes to debt consolidation. With more than 20 years of experience helping people tackle debt, he has a unique insight when it comes to solving debt-related problems. 

Dan got his start when he went to work for a bank after getting his Business Degree. He worked his way up and became a loan officer. This position gave him unique insights into the ways that financial products work and how people can utilize different financial products to improve their lives. He’s seen hundreds of success stories and just as many failures – so he knows what steps are most likely to help his readers.

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