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6 Solid Tips for Veterans in Need of a Loan
U.S. military members transitioning out of service can find themselves facing many unique money challenges. After all, duty to one's country can understandably push personal money management to the back burner. Fortunately, there are steps veterans can take to secure the funding they need to achieve their financial goals.
Here are some tips for veterans looking to secure a mortgage, small business loan or other types of financing.
1. Know What Federal Benefits Are Available …
There are programs out there designed to help veterans and their families overcome the various money challenges that can arise when a family member is on active duty. For instance, veterans are eligible for VA home loans, which often feature no down payment, no mortgage insurance and flexible underwriting requirements. And there are various grants, loans and business development programs backed by the U.S. Small Business Administration that can help former military members and budding entrepreneurs.
Veterans can get acquainted with the general benefits available to them on the Veterans Benefits Administration website. Prospective entrepreneurs can begin looking into business financing by checking out the Small Business Administration's Office of Veterans Business Development online.
2. Research All of Your Options
That's not to say veterans should limit themselves to federal loan programs. For instance, when it comes to mortgages, "to be sure, VA loans aren't the right fit for every veteran," Chris Birk, a Credit.com contributor and director of education for Veterans United, a VA loan lender, said. "Understanding all of your mortgage options is also key to getting the best deal possible. Even veterans with sterling credit and a 20% down payment would benefit from comparison shopping between conventional and VA loans."
3. Consider Financial Institutions That Cater to Vets …
If you do decide to go for a VA loan to buy a home, consider finding a mortgage lender who knows the ins and outs of that type of financing.
"VA loan market share has soared over the last decade, but it's still a niche product for many lenders and real estate professionals," Birk said. "Working with companies and professionals who know the ins and outs of VA loans can help ensure veterans get the most from this benefit."
Similarly, you can look into finding a credit card issuer or bank that caters to former and current military members. (We've got a list of some of the better military credit cards here to help you kick off your search.)
And there are several startups, venture capitalist funds and, even, angel investors out there that offer small business financing exclusively to veterans and military members that may prove worthwhile, depending on your financial situation.
4. … But Be Sure to Assess Your Finances Holistically
We say "depending on your financial situation" because it's important to consider factors beyond your status as a veteran when making money decisions. Take credit cards as an example. Ultimately, the right one for you will be influenced by your current financial situation or goals. For instance, if you're trying to pay a lot of debt, you might want to look into a balance-transfer credit card.
The same thing applies when exploring other financing opportunities — just because you're a veteran doesn't mean products designed for veterans are going to be the ones that best need your financing needs.
5. Watch Out for Scams
Due to the money challenges some veterans face (often related to spending extended periods of time out of the country or relocating frequently), they often find themselves on a scammer's radar. That's why it's a good idea to vet any business you're thinking of getting a loan from before filling out applications. You can start by conducting a thorough search online or checking a company's status with the Better Business Bureau.
6. Brush Up Your Credit
A good credit score can make all types of financing more affordable, so it's a good idea to see where you stand before applying for a loan. You can get a free credit report snapshot, along with two free credit scores, updated every 14 days, on Credit.com. You can also pull your full credit reports from each of the major consumer credit reporting agencies for free each year at AnnualCreditReport.com.
If you need to build credit, you can look into credit-builder loans or secured credit cards, which help people with thin files establish a history of using credit wisely. If you need to improve your credit, you can focus on paying down high credit card balances, disputing credit report errors and limiting applications for new credit, all of which can hurt your credit score.
