They are on TV seemingly every 15 minutes. They are in your mailbox every day. It’s retired U.S. Navy Rear Adm. Tom Lynch, and now a newly turned carpetbagger, selling the concept of 100 percent real-estate equity loans to veterans and GIs.
You are fed the nonsense about how, since you served, they want to serve you. Right! If it’s profitable for them. Adm. Lynch fails to mention he has a very large financial interest in the company that will lend you the money.
It is all about how much he cares for your welfare. Sort of like the car dealers with their giant "welcome home" signs. Drooling over all that overseas and hazardous-duty pay you are carrying around.
People and organizations you never heard of from places like Virginia Beach flood your mailbox telling you, the military retiree or the active-duty GI, what a great deal they have for you sanctioned by none other than the VA! The United States government in its infinite wisdom. Think financial crash of 2007-08.
One hundred percent of the equity in your home is available to you in a new loan with your property as collateral.
There may be a very few who might actually pull some sort of financial coup by doing this. The rest of you are suckers.
The last thing in the world you want to do is borrow money on your home equity. It may be, and frequently is, a case of poor money management that has you needing to borrow money anyway.
You want to modernize the bathroom or add on because the family is growing. If you can afford the increased payments, then those are possible legitimate reasons to tie up your most precious asset, your home, in additional debt.
On the other hand, if you are doing it to pay down debt from credit cards, furniture stores, loan companies, etc., you may be making a very bad mistake. Your financial issues are very possibly the result of bad money management. Join the crowd! More than will admit have been there.
A loan with increased payments is not going to necessarily change your habits. You will very likely end up with the same level of credit-card debt as time goes by, and no more equity to borrow against.
I was in the business. Here is the way it works. Worst-case scenario, you find yourself in bankruptcy court. The first thing the judge does is to tell the credit-card people and any others who have unsecured debt claims to leave. They are out of the contest to see who gets your money by court order.
The mortgage people stay. They are going to take your house. You go to the curb. I’m not sure they even need to go to court. They just file the papers and send the sheriff to dispossess you.
I can’t believe the VA is behind this intense campaign to get active and retired military to borrow money on their homes. Never borrow money needlessly. The world’s smartest man, Albert Einstein, when asked what was the strongest force on the face of the Earth was expected to reply "nuclear energy," or something like that. He answered, "compounded interest"! When you borrow money, you are unleashing the Earth’s strongest force against yourself, your home and your family.
There are many factors to consider. First and foremost is that those interested in making you a mortgage loan, including the salesperson, are in business to make a profit.
With few exceptions, you are the only one in your corner. Act accordingly. Advice is not always in your best interest.