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- What Are Netting Escrows & How Does It Work?: The Best Guide - January 2, 2024
- The Secret About Prescriptive Easement: Top Guide 1 Must Know - December 4, 2023
- About Home Equity Loans In Texas And How Can One Obtain It - November 27, 2023
VA Cash Out Refinance For Debts Consolidation
According to online studies, an average American household carries about $16,048 in credit card debt alone. The average interest on credit cards is close to 18%.
In today’s post, we will discuss VA Cash out Refinance could be used by veterans to eliminate credit card debts.
It could be very emotional for some people when they look at their credit card statements every month, thinking about how to stay afloat.
How Long Would it Take to be Debt Free?
You might be feeling that it is impossible to be debt-free right now. It is possible, especially for veterans than others to be debt-free right now.
If your household credit card debts are around $16,000, your minimum payment, according to 18%, is close to $401.20.
If you keep making the minimum payment towards your credit card debts without utilizing more than $16,048, it will take more than 30 years to pay off the total debt.
Moreover, you end up paying a staggering $23,493 worth of interest amount on top of paying back the principal amount of $16,048. So you will end up paying almost $40,000 over the time on a $16,048 charge.
What Should You Do?
The most important thing that you should do is to pay off the credit card debt as soon as possible. Don’t make the minimum payments.
If you have a VA loan right now on your home, you can act now and speak to your lender for a VA IRRRL loan, which is one of the fastest and the easiest ways to pay off your credit card debts.
It may take some time to pay off the debt, but it is still way faster than the regular path. To qualify for a VA IRRRL, you need to have an existing VA loan on your property.
In a VA streamline loan, you can take the money saved from the IRRRL each month and apply all savings to the highest rate credit card first.
You can also make the postponed payments and escrow refunds to pay down the entire balance upfront.
For example, let us say that you are saving $150 on VA streamline every month and apply that towards minimum credit card payments You will save around 350 months and be debt-free in just 39 months.
That will save you about $18,275 in interest.
If you don’t have a VA loan on your home, you may not qualify for VA IRRRL. But if you are a veteran or active in the military, you can opt for a VA cash-out refinance and get all your credit card balances eliminated at one time.
In VA cash-out loans, you can get up to 100% of your home’s value. For example, let us say you bought your home for $250,000 in 2017.
And the current value of the house is appraised at $300,000 with a current loan balance, possibly around $240,000, you have around $60,000 in equity that you can get through VA cash-out refinance.
You can get the cash-out of $16,048 cashout and pay off your credit card debts. The remaining amount that you have after paying off your credit cards, you can use to pay off your student or college loans.
Education loans can also be part of your finance for a very long time. Hence, if you get an opportunity through VA cash-out refinance, you can be completely debt-free.
VA cash out refinance is the only loan in the country that allows borrowers to borrow up 100% of the home’s value without paying any mortgage insurance or private mortgage insurance.
According to the new VA guidelines, all the VA cash out refinance must pass the net tangible benefit test. If you are using it to pay off high-interest debts, you can still borrow up to 100% of your home value.
Conclusion
Being a veteran or active military personnel comes with a lot of benefits. VA streamline and VA cash out refinance are some of the benefits that the veteran can use for their financial upliftment.
If you are a veteran or active military personnel, please speak to your loan officer to know about these loans to get your credit card debts eliminated.
