Throughout the years, the Veterans Affairs has ensured that the modern heroes of America are given adequate opportunities when it comes to their finances. Aside from offering one of the best mortgage program out there today, the VA also saw to it that military members and servicemen have a fall back to when they are hampered by certain difficulties along the way.
One of these opportunities is Military Debt Consolidation Loan (MDCL). Available to veterans with VA-insured mortgages, the MDCL allows eligible veterans to consolidate their debts into one loan for convenience in payment.
At its core, the Military Debt Consolidation Loan is a refinance made against your home equity. By taking a new loan that is more than the original amount owed, you will be able to take out the difference in cash and by this money, pay off your debts such as your credit card dues, personal loans, and other unsecured debts. Instead of paying for multiple lenders, a consolidated loan lets you pay to only one, avoiding possible confusions and missed payments. You also get to pay very low interests.
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What are the limits?
With the MDCL, the value of your new loan cannot exceed the appraised value of your home. And if it so happens that you have a problem repaying your VA loan, you might be limited in the future as to how often you can take out a VA loan.
The closing costs can be subtracted from your cash-out and how much this amount will be depends on your lender.
It’s also important to remember that by consolidating your debt, you are restarting your mortgage clock, sacrificing your equity, and taking more debt. On top of that, you are turning your unsecured debts into secured ones and putting your home as a guarantee. That means if you are unable to repay what you owe, your house can be taken from you.
Our lenders can answer your questions about VA loans here.
Secure yourself
Be honest with what you can afford to see if
consolidation is really right for you. The loan should be able to result in benefits for you as a borrower in the long run. Otherwise, you may speak with your lender for the availability other programs that will be beneficial for relieving your current financial difficulties.
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