Jul 7, 2021 7:49 PM EST

Why Enlist? Do it For the Benefits

In the age of compulsory military service, the primary reason people joined the military was simple. With few exceptions, they had no choice—unless they wanted to break the law, potentially spend time in prison, and be labeled as a felon for the rest of their lives.

Why Enlist? Do it For the Benefits

During the Vietnam War era, more than 1.2 million men were drafted to fight. But here are a few lesser-known known statistics: some 209,000 men were accused of “dodging” the draft. And 3250 people convicted of the crime were jailed in the US. In Canada, draft evasion never a crime and it had abandoned conscription after World War II. Not surprisingly, given its proximity to the US and liberal stance on the draft, Canada became a haven for American men seeking to avoid military service. Even after President Jimmy Carter pardoned draft evaders in 1976, about 50,000 who emigrated to Canada to escape military service never returned to the US.

Military Service Today

The US military is currently comprised of more than 2.3 million active-duty soldiers and reservists. In Canada, the total number of military personnel is 112,000. A 2020 study in the US revealed that popular opinion, particularly among conservative Americans, is that people join the military primarily out of a sense of patriotic duty. On the flip side, those who lean heavily left on the political spectrum believe that military service is driven by financial hardship: with low-skill jobs in the US often not paying even a living wage, military service is an economic last resort.

The truth may lie somewhere in between, but it appears the liberals may understand military enlistment dynamics more accurately. A 2018 study commissioned by the U.S. Army Recruiting Command found that a full 46% of low-ranking soldiers joined the military purely for the economic opportunity, while only 9% joined out because of institutional motivators like tradition, family, and duty.

Exclusive Benefits for Vets and Active Service Members

The United States government passed the Servicemen’s Readjustment Act, more popularly known as the GI Bill, in 1944. It was designed, in part, to stabilize the job market when thousands of largely unskilled soldiers returned from war. Many of its features, including generous tuition assistance and job counseling, were included to give vets the skills they needed to succeed in the post-war economy. The bill also solidified the Veterans Administration’s position in the US bureaucracy: it was declared an essential wartime agency for the first time. The bill has gone through multiple iterations. Most recently, the Forever Bill was passed during the Trump administration. It extended some of the time-limited benefits included in previous acts to last a vet’s lifetime.

In addition to educational benefits, one of the anchors of the GI Bill has always been the federally-guaranteed VA home loan. VA loans have opened the door to homeownership to countless vets and active service members who may not have been able to purchase a home without the financial benefits the VA loan program offers. Canada also offers soldiers low-cost government-guaranteed loans as part of its veteran benefits plan.

The Anatomy of a VA Loan

In the US, VA loans, while backed by the government, are administered through thousands of mortgage lenders across the country. Lenders must be approved to provide VA loans and comply with a multitude of regulations governing them. That’s the government’s way of safeguarding veteran’s rightful benefits under the law. Here’s what you need to know about VA loans:

·       Because VA loans are guaranteed—meaning if a borrower defaults on a VA mortgage, the government steps in to pay it off—the loans are considered lower-risk than conventional loans. VA loans have less stringent credit qualification standards. While loan approval is not guaranteed to all eligible applicants, many vets who have been turned down for a conventional mortgage, are able to access home financing through the VA program.

·       Interest rates on VA loans almost invariably track below current market rates. The rate difference between conventional and VA loan interest rates is typically between a quarter-point and a half-point. That may not sound like much, but it makes a difference in homeowners’ monthly payments and, when amortized over a 15-, 20-, or 30-year mortgage, can amount to savings well into the five-figure range.

·       VA loans offer something highly unusual: a no-down-payment option. That feature alone breaks down a major barrier to homeownership. Being a soldier doesn’t pay much, particularly in the early years of service. Amassing a down payment can be a stretch for service members—especially millennials and young people who are just beginning their careers. 

·       While some homebuyers are approved for a mortgage with only a small down payment under the terms of a conventional mortgage, borrowers who put down less than 20% of the purchase price of their home are required to pay Private Mortgage Insurance premiums. That’s one way lenders limit their exposure on loans they consider higher-risk. But since VA loans are government-backed, they’re low-risk. Under VA loan regulations, borrowers are not required to pay for PMI no matter how small a down payment they make. On an average-size home, PMI premiums are typically about $100 monthly. That’s one less cost VA borrowers don’t have to absorb and another reason why VA loans are more affordable.

Top Tips for VA Mortgage Shoppers

·       While it’s true that VA loans are often approved for vets and active service members with fair or even low credit scores, the best deals go to the most creditworthy borrowers. Before you apply for any mortgage, be sure to download a free copy of your credit report. If your score is south of 580, you should launch a diligent credit repair campaign and wait until you can bring your score up. Even if your credit score is in the high range, there are some simple ways to gain a few points. Each point will get you closer to a great interest rate.

·       Investigate multiple loan scenarios. Check to see how choosing a shorter-term loan or making a higher down payment would affect your monthly payment and lifelong loan costs. You can ask a mortgage lender to help you with this, but you can also use one of the many loan calculators available online to help yourself to greater financial insight.

·       Compare offers from multiple lenders before committing to a loan. Some lenders approach VA loans as something of a sideline, but others truly specialize. A knowledgeable loan officer can be your best friend as you hunt for the right mortgage.

·       All loans have costs associated with them, including loan origination, title search, and home inspection fees. Some lenders allow you to roll these costs into your loan, but that will drive your monthly payment up. So be sure to make your decision on real numbers, inclusive of the ancillary costs of taking out a home loan.

The Veterans Administration is a reliable, objective source of information on VA loan benefits. You can learn a lot by consulting the various sites the agency devotes to educating vets and active service members. Some vets are aware that they can use their VA loan benefits over and over again. If you’re still on active duty and expect to move frequently over the next few years, that’s a handy fact to tuck in your back pocket. And if you own a home but have a conventional mortgage? Look into refinancing it under the VA loan program. Chances are, there’s some savings to be gleaned. It’s yours. You deserve it. Don’t leave it on the table.

Author Bio:

Susan Doktor is a journalist, business strategist, and principal at Branddoktor. She writes on a wide range of subjects, including finance, real estate, and government affairs. Follow her on Twitter @branddoktor.