Over the years, Congress has enacted laws designed to protect active-duty military servicemembers, as well as provide them with financial benefits and compensation beyond their pay. However, some military servicemembers aren’t receiving their full benefits. One of the benefits that some military servicemembers aren’t taking advantage of is the cap on mortgage rates.
Servicemembers unaware of their benefits
In some cases, military servicemembers are unaware of the benefits available to them. The Servicemembers Civil Relief Act (SCRA) outlines a number of benefits to military servicemembers in an effort to help them better manage their finances and provide them with protections. One of those protections is a 6% cap on mortgage rates.
Unfortunately, in the past, it has been up to servicemembers to recognize their missing benefits and apply for relief. As a result, many servicemembers don’t even realize that this program is available. This is where a recent partnership between lenders and the White House comes in.
In August 2014, President Obama announced that a partnership with some of the largest lenders and mortgage servicers in the United States, including Quicken Loans, will actively seek out servicemembers and make sure their rates are below the cap. “Under the law, our servicemembers are entitled to reduced mortgage rates, but the burden is on them to ask for it and prove they’re eligible,” Obama said in a speech in North Carolina.
The idea is for big mortgage loan servicing companies to reach out to military servicemembers, rather than wait for active-duty military members or their families to come to the loan services.
“It’s clearly the right thing to proactively reach out to active-duty military members and make sure they — and their families — are financially protected,” says Bill Emerson, the CEO of Quicken Loans.
Quicken loans is reviewing its loan servicing portfolio and comparing it to records with the Department of Defense to identify active-duty military servicemembers. Once the servicemembers are identified, Quicken can reach out to them, or to their family members, and let them know what they are entitled to under the SCRA.
Rate comparison for active-duty military
Having a lower interest rate can go a long way toward making a mortgage more affordable for anyone. Even a rate that is just a percentage point lower can mean savings of tens of thousands of dollars over the life of a loan. Not only that, but a lower interest rate can also mean better monthly cash flow. In any family that is struggling financially, or that has a lot to contend with, having that lower mortgage payment can make a big difference. That’s why shopping around for the best mortgage rate, and seeing if you can refinance to a lower rate, is so important.
However, active-duty military servicemembers and their families often don’t have time to shop around for a better mortgage rate. Even though someone might be entitled to a better rate, it can be difficult to find the time to apply for benefits and comparison-shop. The partnership between lenders and the White House takes some of the burden off servicemembers. “Our military members have enough on their plate without burdening them with the added stress of having to contact their lenders to activate benefits the law entitles them to receive,” says Emerson.
Quicken Loans is the nation’s largest Veterans Affairs (VA) mortgage lender. Please visit theimk.com’s VA Mortgage Options page for more information.