People serve in the military for several reasons. We applaud the selflessness of our men and women in uniform. But it’s important to note that there are many benefits to service beyond doing your part to keep the country safe. In fact, joining up can do a lot to improve your financial bottom line. You can qualify for funding for your education, discounted or free healthcare, and a VA loan when you buy a home.
What is a VA Loan?
The VA loan program is one major benefit to serving, that very few veterans, and active duty service members ever use. According to the research team at ConsumersAdvocate.org, only 6% of eligible borrowers ever utilize this lucrative program. VA loans have no down payment requirements and their interest rates are consistently below the industry standard. Therefore, VA loans outperform conventional loans in almost every scenario.
How To Save with a VA Loan
Let’s get down to brass tacks. According to Business Insider, the average price for a home in America is $230,000. Assuming a hypothetical interest rate of 4.5% on a conventional loan versus a VA loan with an interest rate of 4.25%, you would save more than $12,000 in interest on a standard 30-year mortgage with a VA loan.
If you put that $33.34 in monthly mortgage savings into an average yield savings account at 1.5% interest, you’d have more than $15,000 after 30 years. Imagine what you could have if you invested that money instead.
For more about how VA loans work and the latest interest rates check out U.S. News & World Report.
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Vets Tell Other Vets
Why then, are almost 20 million of the nation’s estimated 21 million veterans and active duty service members missing out on this great program? Why are they leaving money on the table?
The answer comes down to reluctance on the part of banks to originate these loans. There’s also a breakdown in communication on the part of U.S. Department of Veteran Affairs (VA).
Because VA loans are guaranteed to have a lower interest rate, the bank issuing the loan will make less profit. The lower profit margins plus the red tape (this is a government program after all), makes VA loans pretty unattractive for banks. So many of them actively steer customers away from VA loans. Instead they lead future vet homeowners towards higher interest, higher profit conventional loans. Banks are businesses, after all, and businesses exist to make money.
Another reason for low enrollment in the program is that the VA could do more to advertise its benefits. Many service members claim to have never even heard about it. The VA should do more to spread the word about VA loans.
Until they do, word of mouth may be the best way to raise awareness about this great benefit among vets and service members. For many people, the lack of a down payment requirement may the most attainable path to homeownership.
Read more about VA Loans at On Q Financial. Find out if you qualify for a VA loan today!
More Resources for Veterans