6 Solid Tips for Veterans in Need of a Loan

Veterans are faced with some unique money challenges. Fortunately, there are ways for them to get an affordable 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 get you started on 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 free credit reports from each of the major consumer credit reporting agencies 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.

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8 Student Loan Repayment Options if You Join the Military

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Several military programs offer scholarships and grants in exchange for your prior military service, or a promise of service in the future. But, what if you already have a degree and are working to pay off your student loans? You may want to consider one of the military’s student loan repayment programs.

In 2013, CNN reported on Thomas McGregor, an attorney who enlisted in the Army to help pay off his $108,000 student loan debt. Between his income and a loan-assistance program, he was student loan free within four years.

Military service isn’t for everyone, and you should seriously consider the potential impact of signing up for a multi-year commitment. It was a good fit for McGregor, who decided to stay on after his three-year service ended. However, he was deployed to Iraq and Afghanistan, and some of his friends were injured or died in combat.

If you decide joining the military is a good choice for you and are paying down student loans, the loan assistance programs could guide your decision to choose one branch over another. While the different programs sometimes share similar names, the qualifications, requirements, and award amounts can vary from one branch’s program to another.

Make sure the loan-repayment guarantee is in your contract before enlisting and double-check your loan’s eligibility for repayment through the program. For example, a program may pay off some types of federal student loans, but not state or private loans. Restrictions also apply based on which position you enlist in, your length of service, and whether or not you have prior military experience. In some cases, the loan payments count as income for tax purposes.

The military’s loan repayment programs and offers can change based on government funding and a branch’s need for new recruits. You can find an overview of the programs below, and you should follow-up with a local recruiter to clarify specifics and find out whether or not you’ll qualify.

Air Force

  • JAG Corps Student Loan Repayment ProgramEligible attorneys can receive up to $65,000 in student loan repayments, payable over three years following the completion of your first year of service. The payments can go towards undergraduate, graduate, or law school loans and payments will go directly to your lender. If you stay on past four years, then you can qualify for a $60,000 in cash bonuses: $20,000 for two more years of service and another $40,000 for four more. That’s not specifically earmarked for your loans, but you can use them to pay off your debt. That would be $125,000 over 8 years, in addition to your salary and other benefits.

Army

  • Healthcare Loan Repayment ProgramsThe Army offers special pay and incentives to doctors, nurses, dentists, veterinarians, psychologists, and other healthcare professionals. Depending on your profession and specialty, you may be eligible for up to $120,000 in student loan repayments over three years of active-duty service in addition to salary, bonuses and special pay. Reserve-duty servicemembers may receive up to $50,000 for three years of service for loans.
  • College Loan Repayment ProgramThe Army also offers some highly qualified Military Occupational Specialists (MOSs) student loan assistance if they enlist for at least three years of service. At the end of each of the three years, you’ll receive the greater of $1,500 or 33.33 percent of your outstanding principal loan balance, less taxes. There’s a maximum potential payout of $65,000.

Army National Guard and Reserves 

  • College Loan Repayment Program The Army National Guard and Army Reserves have similar student loan payments for some highly qualified Military Occupational Specialists (MOSs). You could receive the greater of $1,500 or 15 percent of your outstanding loan principal at the end of each year of service, up to a maximum of $20,000. To qualify, you must enlist and serve for at least six years. Parent PLUS loans can be covered. 

Coast Guard

  • College Student Pre-Commissioning Initiative Student Loan Repayment ProgramThe Coast Guard offers recent college graduates who are 19- to 27-year-olds up to $10,000 per year, for six years, in student loan aid. The program requires candidates to complete a series of trainings, including basic training and leadership training, and enlist for five years as a commissioned officer. There are some interesting catches: you can’t have more than two dependents and if you’re single, you can’t have sole or primary custody of dependents. Online degrees also don’t qualify.

Navy

  • Health Professions Loan Repayment ProgramThe Navy pays select health care professionals up to $40,000, minus approximately 25% for federal income tax, in student loan payments each year in exchange for agreeing to continue, or begin, active duty service. The hefty tax portion will be taken out prior to sending the payment along to your lender.
  • College Loan Repayment Program Pays up to $65,000 in student loan payments if you’re serving in your first enlistment.

National Guard

  • Student Loan Repayment ProgramYou could receive the greater of $500 or 15 percent of your initially disbursed loan amount each year, with a maximum $50,000 payout and minimum six-year service agreement. You must have at least one disbursed Title IV federal loan.

Public Service Loan Forgiveness

The Public Service Loan Forgiveness (PSLF) program isn’t military specific, instead it’s a federal loan-forgiveness program contingent on your employment with a qualified government or non-profit organization. Only federal student loan that are part of the Direct Loan program qualify for PSLF. However, you may be able to consolidate non-qualifying federal loans (such as a Perkins loan) into a qualified Direct Consolidation Loan.

With PSLF, your remaining loan balance will be forgiven after you make 120 qualifying monthly payments (10 years’ worth) while employed full-time. The 120 payments don’t need to be consecutive, and some, or all, of the employment, could be within the military. You currently won’t have to pay income taxes on the forgiven amount.

Additional Military Benefits

In addition to the loan repayment programs, your federal student loans may be eligible for a capped 6-percent interest rate during active duty, and up to five years of no interest if you’re serving in qualified hostile areas. You may also be able to postpone payments during active duty, but the loans will still accrue interest.

Bottom line

The military’s student loan forgiveness programs may be able to help repay your loans, but don’t take the decision to enlist lightly. Other employers offer loan repayment programs, and potentially less-dangerous jobs qualify for the PSLF. If you do decide to enlist, compare the loan repayment programs and be sure to get the loan repayment included in your contract.

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How to Maintain Good Credit While Serving in the Military

Budgeting during deployment or transfer to a new assignment might be on the mind of many military service members. What might not be are credit scores and how they could impact the costs for everything from a credit card’s annual percentage rate, or APR, to a new mortgage.

Here are four tips for how to maintain good credit while serving in the military.

1. Save When You Can

Whether you’re on active duty, in the reserves or are returning from tour, keeping a savings account may help you avoid going into debt now or down the road in an emergency. (Consider these five mistakes to avoid when you start saving.) 

“The best advice is to make savings a priority while avoiding unnecessary spending,” Bruce McClary, the vice president of communications for the National Foundation for Credit Counseling, said in an email. “Adequate savings will help avoid financial emergencies that would otherwise lead to unmanageable debt. Savings also helps during periods of transition from military to civilian life.” 

While you’re serving can be a good time to save, as some of your expenses may be covered by the military. This can help you save for emergencies or hefty future expenses, like raising a family or buying a home. (Though some veterans can qualify for 0% down VA home loans.)

2. Communicate With Those Back Home

If you are sharing an account with someone at home, it’s a good idea to discuss payment plans and spending before you leave so everyone’s on the same page. But the communication shouldn’t end there.

“Staying in touch with joint account users, such as spouses, can help avoid any surprises while keeping accounts paid as agreed,” McClary said. “At the same time, you should use all means available to monitor account activity online whenever possible.”

3. Use Online Resources to Your Advantage

Depending where you are deployed, you may or may not have frequent internet access. However, if you do, there are several online tools to help you maintain good financial habits while serving in the military, like online banking and budgeting tools.

“Those serving on active duty can set alerts that help them keep a closer eye on how an account is being used, giving them instant access to charges and balances,” McClary said. “Payment due date reminders can also be helpful, along with automatic payments.”

Having a late payment can subject you to late fees, and missing one altogether can potentially harm your credit score. So even if you have automatic payments set up, it’s a good idea to monitor those and ensure they go through as scheduled.

“If automated payments have been arranged, set a schedule where you can check to see if they were processed correctly,” McClary said.

If you don’t have internet access while overseas, consider having a trusted family member check your accounts to make sure any automatic payments are processed correctly and on time.

4. Keep an Eye on Your Credit

“Credit reports should also be monitored on a regular basis,” McClary said. If you have internet access, you can get your free credit reports once a year on AnnualCreditReport.com, and you can view your free credit report summary, updated each month, on Credit.com. Should you find any inaccurate information, you can dispute the errors on your credit reports with the credit reporting agency or agencies that have it wrong.

Members of the military who are deployed can also consider placing an active duty alert on their credit reports.

“An active duty alert remains on the report for one year,” Rod Griffin, Experian’s director of public education, said in an email. While the alert only lasts a year, it can be renewed. “It notifies creditors that you are a member of the U.S. military and that you are currently on active duty,” he said. “An active duty alert does not require a lender to contact you directly to get your approval before granting credit in your name, but it does enable them to take appropriate action to protect your identity.”

[Offer: If you need help fixing errors on your credit report, Lexington Law could help you meet your goals. Learn more about them here or call them at (844) 346-3296 for a free consultation.]

More on Credit Reports & Credit Scores:

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5 Options for Enlisting in the Military to Pay for College

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Lacey Langford was taking classes at a local community college when she realized she’d rather work full-time to save money for school. “My father was an Army officer, and I decided I wanted to join like him,” says Langford, now 38, who lives in Summerfield, NC. “He convinced me to at least talk to the Air Force recruiter. That was it. I realized it would be better for me and I committed to the Air Force.”

Three years into her active duty, Langford started taking classes at night, using the Air Force’s Tuition Assistance program and the GI Bill. She later separated from the Air Force and completed her degree at the University of North Carolina at Wilmington. She estimates that the GI Bill paid for 100 percent of her tuition, 85 percent of her books, and about 40 percent of her room and board expenses. “I am happy with the way it worked out, walking out of school with zero student loan debt,” says Langford, who today is a financial planner. “I also gained valuable work experience and discipline. The discipline alone has reaped major rewards.”

With the average 2015 graduate coming out of school with more than $35,000 in student loans, being able to get a degree without all the debt is appealing, to say the least. Langford’s path to tuition coverage is one way to do it, but the military offers a variety of ways to pay for schooling or even to pay back student loans. Here are a few options:

1. ROTC Scholarships

Some schools offer the opportunity to apply for a Reserve Officers’ Training Corps (ROTC) program that could pay for nearly all of your tuition, fees and books charges for four years of school, in exchange for a commitment to enter the service as a commissioned officer when you graduate. You generally promise to serve for at least four years post-graduation. There are also two- and three-year scholarships available, depending on how many years you have left in school. Each branch of the military has their own information and program.

2. Montgomery GI Bill

During basic training, recruits get the chance to sign up for this GI Bill plan, paying for it with $100 a month during their first year in the service. Once enrolled, however, eligible members can receive a monthly stipend while attending classes, based on their active duty status and how long they’ve served. For instance, effective October 1, 2015 through September 30, 2016, those who have completed an enlistment of three years or more and enrolled in full-time school qualify for a monthly stipend of $1,789. Rates generally go up every year.

3. 9/11 GI Bill

Any veteran with at least 90 days of active duty after September 11, 2001, with an honorable discharge, is eligible to take advantage of this benefit. The biggest benefit goes to those with at least three years of active duty service. For those with three years of active duty service and attending a public school, the 9/11 GI Bill will pay up to 100% of tuition and fee payments for an in-state student. For private or foreign school attendees, payment is up to $21,970.46 per academic year.

4. Tuition Assistance

Each branch of the military also offers its own tuition assistance program, in which active duty members can get money toward tuition and fees for qualified programs. The Air Force, Army and Marines offer up to $4,500 per fiscal year with caps on credit hour costs, and the Navy offers up to $250 per semester credit hour or $166 per quarter credit hour. The Coast Guard offers up to $3,375 per fiscal year. This may also be an option for you if you belong to one of the service’s Reserve units.

5. Student Loan Repayment

If you’ve already incurred student loans, you may be able to enlist in the military and have them paid off over time. Each branch offers its own program for this. The Army and Navy, for example, will repay up to $65,000 of a soldier’s qualifying student loans, and the Air Force will repay up to $10,000. Generally, after each year of completed active duty, your service will pay 33-1/3 percent or $1,500, whichever is greater, of your total unpaid balance.

There are other programs that may assist with school costs or loan repayment, depending on your position, active duty status and career field. You can get more information on all programs at military.com/education, or find specific information from the military branch you’re interested in.

A word of caution

Although these are all valid pathways to an education without massive student loan debt—or any debt at all in some cases—experts advise that students shouldn’t join the military for the tuition assistance alone. “There are people for whom the military is great, but for some people, the military is just not for them,” says Ryan Guina, founder of TheMilitaryWallet.com, who used the military’s Tuition Assistance program to get his degree while on active duty with the Air Force. “If you’re going to join for a specific benefit, make sure all the other aspects are in line with your values and what you’re looking for out of life. I encourage people to look at the military as a whole and not just a means to an end.”

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