If you are a veteran and plan on getting a mortgage loan, the Servicemember Civil Relief Act (SCRA) may help. This act protects servicemen and their families when they are in active duty, including provisions that allow members of the military to obtain a mortgage loan at an interest rate not exceeding 6%. Not only can this be beneficial for veterans who want to get into homeownership, but it can also make refinancing easier due to the lower interest rates. However, it is essential to keep in mind that some qualifications are required before you will qualify for these benefits.
Eligibility for SCRA Benefits
The SCRA has specific requirements that you must meet to qualify for these mortgage loan benefits. Before you can be eligible for these benefits, there are certain conditions that you must meet. You need to make sure that you are currently on active duty or if your spouse or dependent is presently on active duty. If this is the case, then other conditions may apply.
For example, suppose you plan on using the benefit of refinancing your mortgages. In that case, an eligible SCRA claim will be needed as well. If you have been granted a discharge from military service under “other than honorable conditions,” then you may not be eligible for SCRA benefits. In addition, the court must approve that this type of discharge does meet the “other than honorable” criteria.
Eligibility under the SCRA is not based on how long you have been in active duty. Instead, it is based on when you were called for active duty, when your service will end, or whether you are currently in active duty. For example, if you are deployed for 90 days or more, you would receive the interest rate benefit. If you are currently serving active duty, then your spouse can also receive benefits under the SCRA. Keep in mind that it is possible to be on active duty and have a discharge simultaneously.
How to Apply for a Home Loan with SCRA Benefits
When you are ready to apply for a home loan, the first thing that you will need is to verify your eligibility under the SCRA. Once you accomplish this, you will be able to submit a claim when applying for your home loan. At this point, it is crucial to keep in mind that you will need to be sure that your lender is aware of the SCRA. If they are not, it can delay applying for a home loan if you are eligible.
Once you have found the right lender, then there are several steps you need to take before your closing date. First, you will need to fill out the required documents when making an SCRA claim. Once you complete this, you will need to attach your claim to all the necessary documents of your home loan package. If you do not provide evidence that you qualify under the SCRA, it can delay your closing date.
What the Interest Rates Are Under an SCRA Benefit Claim
When you apply for a home loan with SCRA benefits, you will typically get the interest rate at 4 percent instead of 6 percent. However, there are certain instances when you may not receive the full 4 percent rate. When this is the case, you must get a waiver from the court before receiving the lowest interest rate possible. If you do not complete this process, then it can delay your closing date.
Other Considerations When Applying for a Loan with SCRA Benefits
In addition to the interest rate, there are some other things that you need to keep in mind when applying for a home loan. Keep in mind that the lender is not allowed to require you to pay any administrative fees. You will also qualify for a streamlined foreclosure process when you qualify for this benefit. In addition, you will also be able to receive the same rate and terms as a person who is not eligible for military benefits.
If you are a veteran and want to apply for a home loan with SCRA benefits, you need to meet certain conditions. The first thing is making sure that you are either currently on active duty or your spouse or dependent is currently on active duty. Once this has been verified, the next step will be filling out the required documents when making an SCRA claim. This includes attaching evidence of how long they have served in military service and discharge type if applicable. You can also get the interest rate benefit at 4% instead of 6%. However, suppose you do not submit all necessary documentation before closing day. In that case, it may delay any progress made towards securing a mortgage loan under these terms.