Student Loans – How Interest Rates Are Set on Federal Loans

You’ve got to take on student loan debt these days if you want to go to college unless you are very lucky. Student loan debt is like any debt. The key to how quickly you can pay it off often comes down to the interest rates. For people with federal loans, the good news is interest rates are quirky in a positive way.The economic condition of the United States is supposedly in a recovery from the Great Recession we recently suffered. With business slow and unemployment in double digits, it is hard to make much of an argument that this recovery has really hit most of us. As we stagger forward, things will improve slowly, but a fiscal accounting must take place. That accounting is going to come in the form of higher interest rates.We have interest rates that are so low now that we’ve rarely seen such an economic condition in our history. The Federal Reserve essentially is loaning out money to banks at a zero interest rate. That can’t last. When it changes, rates are going to move up and so are your debt loads. For those with fixed rate loans, the news will mean little since rates will stay the same on the debt in question. For those with adjustable rates, things are going to get ugly.What about federal student loans? Well, I have really good news if you are carrying federal student loan debt. The rates on your loan are not set by the market or some cold bank per se. Instead, Congress actually sets the rates on your loans. The legislative body actually sets a range of rates that can be charged for each loan, but the banks actually issuing the money always [and I mean always!] go with the highest possible allowed rate. The rates can change year to year, but are usually much lower than private loans and such. You can access the current rates for Perkins, Stafford and PLUS loans at the website for the Department of Education.Like all debt, the interest rates on student loans are going to be going up in the next few years as the Federal Reserve raises rates in general. If you have federal loans, you can expect the pain of these increases to be much smaller than with private loans.

College Loans – How to Avoid Paying Interest Rates For School Loans

One of the worst decisions that a person can make when going to college is to take out too many college loans. They are easy to get and people can forget that later on, years or months later, they will have to pay them back. One of the things that accrue is interest. Here is a way to avoid paying a substantial portion of the interest.When you go to get college funding, you will have many options. One of them is to apply for the Pell Grant which is generally given to all people that are at a lower income level. As long as you apply on time; you can get most or all of this funding.If you do not qualify, your next best choice is to apply for scholarships. These are popular and useful, but can take a great deal of time to complete. The forms tend to be lengthy and most people do not have the patience to get them done and send them in for evaluation.For those that need funding, but cannot get any right away, you can take out student loans. These are very handy. You walk into the financial aid office, and if you have completed the FAFSA on time, they will automatically know how much you will be eligible for.The problem is that once you take out the loans, you do not realize that the interest, usually around 8%, is going to start to accrue as soon as you are out of school and sometimes even before.The best way to save you thousands of dollars over time is to pay off the small amounts of interest that can be paid off early. This way, that money does not compound over time.You will get these statements in the mail every month. Once you receive them, send in the few dollars that they are asking for. This way, you are up to date and your principle amount will remain the same.Over all, there are many better choices than taking out a student loan, but if you are forced to, then make sure that you take care of the interest before it makes the amount you owe too large to handle once repayment begins.

Bad Credit Home Equity Loans – Tips On Obtaining A Home Equity Loan Even if You Have Bad Credit

Consider this scenario: You have an urgent, large expense to meet. You want to consider a home equity loan but a bad credit situation is giving you pause. Don’t let bad credit worry you! You can now get a bad credit home equity loan to improve your credit and meet your expense. There are lenders who specialize in bad credit home equity loans.It is important to understand what home equity is and what a home equity loan could mean if things don’t go as planned. The difference between the market value of your home and the credit you owe on it comprises your home equity share. The loan that is given against this equity as collateral, which could vary from 75% to 125% of equity value, is called home equity loan. If you are unable to meet the terms of repayment for the loan, you could potentially lose your home. So, think through your current credit situation and future repayment capability before deciding.Once you have decided to take a home equity loan, the first thing to do is to get information about the prevailing market rates and options so that you can make an informed decision on which lender to go with. Lenders typically look at the last three years of your credit history. First get your credit rating and if possible, improve it before you apply for a home equity loan. This will give you better interest rates and repayment terms and also get you greater loan amount. Even if you have to rely on the home loan to improve your bad credit, there is no need to panic. It may only mean you have to look harder and pay higher interest rates.Talk to your existing banker or lender about your decision to go for a home equity loan and get their feedback and the rates they are willing to offer. This could be a starting point for your comparative study of various lender quotes. It is necessary for you to study the market before signing a loan deal because in the long run, it could save you thousands of dollars by way of interest. These days it is simple to sit and analyze the available options, as everything you would want to know is available over the Internet. If you have very poor credit ratings (FICO score below 500), then more research is required as many lenders do not transact below a standard credit level; in such a case going online is your best bet to get a list of lenders willing to deal with you. Just spending a few hours online could help you to nail the best provider.You will have a choice of going for variable or fixed interest rates. Fixed rate, as the name suggests, is fixed throughout the loan term whereas variable starts with a lower rate but could fluctuate very often through the term, basis market conditions. It is always a better idea to go for fixed rates unless you have any other pressing reason. If you have compiled and analyzed all the quotes at your disposal, have made sure that you can stick to the repayment terms in the future and then have signed your bad credit home equity loan deal, rest assured – you are on velvet!

Home Improvement: Home Equity Line of Credit versus Mortgage Refinance

Making home improvements, home remodeling, adding onto a home and debt consolidation are some of the most popular reasons people cash out on their home equity. But the question is, which should you choose, mortgage refinancing or a home equity line of credit (HELOC)?A mortgage refinance loan is when you replace your current mortgage with a new loan. People refinance their mortgages for a variety of reasons including, refinancing from adjustable rate mortgages (ARMs) to fixed interest rate ones, liquidating equity into cash (cash-out refinance) or to reduce monthly payments and extend the loan term. A mortgage refinance has the same costs as a mortgage, such as loan application fees, loan origination fees, and appraisal fees.A variable rate HELOC, where the interest rate and annual percentage rate (APR) can move up or down, depending on the Prime Rate published daily in the Wall Street Journal, is one of two popular second mortgage options, with the other being a home equity installment loan (HEIL). HELOC second mortgages provide you with the flexibility of borrowing all or part of your equity and you only pay interest on what you use unlike a HEIL or refinance. Because HELOCs work like credit cards, you can pay down your balance and borrow again without having to apply for a new loan. And, according to ehow.com, there are no closing costs for second mortgages, as there are with refinancing.If you have an adjustable rate or high interest rate mortgage that you want to refinance into a lower fixed rate while cashing out on equity for home improvements or other purposes, a mortgage refinance may work the best for you. However, according to ERATE.com, if the rate on your existing first mortgage is substantially lower than that of current market rates and if you have been making payments on your mortgage for a period of five years or more, then a second mortgage may be a more sensible financial solution than starting over with a new first loan.

Hybrid Home Equity Loans Changing the Face of Second Mortgages

Applications for home equity loans and second mortgages recently hit a 15 year high. According to Freddie Mac, “88% of homeowners who refinance their homes in the 1st quarter got a mortgage at least 5% larger than their first loan.” Since this was the largest increase since 1990, and the Fed continues to increase key interest rates, it is my contention that the demand for cash and the ability to finance quickly is the greatest it has been since World War II.”The reality is that some people still believe the interest rate are under 6%,”said John Allen from Laguna Beach, California. John continued, “If I need cash for home improvements..Why wouldn’t I just take out home equity loan since my first mortgage rate is under 5%.” John’s mentality mirrors many of my borrowers’ frames of mind of late. Consumers are much more educated than they used to be about financing and taking out second mortgages. First time homebuyers don’t hesitate to get subordinate financing to help them accomplish their goals. Some people like John just want to finance the construction for pool and spa, but most of my borrowers are focused on consolidating credit card debt so they can cut their expenses and have access to more money at the end of the month.Some interesting home equity products have rolled out recently. Companies like BD Nationwide Mortgage and Ditech are offering larger 125% loans, and convertible equity credit lines. They are called convertible, because they start out as variable rate credit lines, but at any point you can convert portions of the line to a fixed rate loan, and still keep the unused portions of the line of credit open for revolving credit. These hybrid home equity loans are changing the face of second mortgage products and they offer powerful features that meet the needs of a typical family as well as the savvy real estate investor.

The Best Companies For Student Loan Consolidation

What are the best companies for student loan consolidation? There are many ways to handle paying your college loans. Many graduates prefer to consolidate their multiple college loans into one loan. Contacting one of the many companies that lend money specifically for student loan consolidation helps make the decision to consolidate much easier.Even if you can make the monthly payments from your original loans, you may still want to consider consolidating to lower your payments and free up money for other bills with higher interest rates. Using some of the best companies for student loan consolidation helps make the process easier rather than going to a company that doesn’t specialize in student loan consolidationsA consolidation loan lets you combine all your federal student loans into one single loan. Consolidation loans have fixed interest rates that are based on a weighted average of all the loans you are consolidating. You can gain a lower total interest rate if you contact companies that provide loans at the lowest average interest rate. This protects you from future rate increases, but does not allow you to benefit if variable rates decrease in the future. You can also get decreased interest rates by making regular payments or simply allowing your payments to be drafted directly from your bank account.Consider The CostRepayments on consolidated loans begin within 60 days of consolidation and have payback terms between 10 and 30 years depending on the amount of the loan and the payment options you select. Some of the best consolidation companies for student loan consolidation will have a variety of plans for repayment, so you’re sure to find one that matches your circumstances. You can also pay your loans off early and there is generally no fee associated with doing so.While loan consolidation can simplify loan payments and lower your monthly bill by as much as 50%, it can increase the total cost of paying off your loan. Consolidation companies are able to offer lower monthly payments by extending the life of the loan. This fact means that the amount of interest you pay may double by the time you pay off the loan. If you don’t need the payment relief offered by consolidation, you should carefully consider the cost of paying your non-consolidated loans against the cost of loan consolidation.You should also consider the fact that once consolidated; you will lose many of the benefits of a non-consolidated loan such as discounts on your interest rate, principle rebates, or loan cancellation benefits, all of which can decrease the amount of your loan.College loan repayments don’t have to be a source of stress in your young adulthood. If you are doing all you can to make your monthly payments, but still can’t find a way to make ends meet it may be best that you contact one of the many companies that offer student loan consolidation. Don’t struggle, investigate today.

Home Mortgage Refinancing 2010-2011: 5 Key Facts to Know Before You Refinance

To the average consumer, lower interest rates generally mean a reason to refinance. But not many people know that these rates are inversely correlated with the stock market. Hence, as long as the stock market is down, interest rates will continue to remain low. Accredited investors take advantage of an efficient market. Well, how do you take advantage of a down market? The following five facts are a must read for anyone looking to refinance their current home mortgage in 2010-2011.

The Home Appraisal Scenario: The number one reason I see nowadays of home refinance loans being rejected is that the appraisal of the clients home didn’t come back up to par. Basically, for lenders to refinance your home, your loan to value ratios must be 80% or better. This simply means that you must have at least 20% equity in your home. Otherwise, lenders will not refinance your current mortgage.
Choosing the Right Lenders: There are hundreds of lenders who would love to have your business. Make sure that you SHOP your loan scenario around. The most effective way to do this is to contact a mortgage broker who has contacts with hundreds of lenders, as they will be your best bet to attaining the best rate. These professionals will fight for your business and help you throughout the entire process
Digging up your Documents- Make sure you have all necessary documents before you shop around for our loan. This includes a copy of your current mortgage statement, HOA documents, your last two pay stubs, your last two years of tax forms, verification of employment forms, and a copy of your social security and ID cards. If you don’t have these items, it will be impossible to refinance your home loan
Choosing the Best Rates- The most sensible rates out there for “refi-ers” are for 30 year fixed programs. These rates are at all time lows and it makes sense to get locked before rates rise. Did you know that the rates for a 10 year fixed are the same for a 30 year? You should get yourself locked in and consider it a wise investment that will yield you dividends in the form of savings for many years to come
Paying No Closing Costs- Have you heard of a “no cost refinance.” Well, some mortgage brokers will charge you absolutely nothing if the rates are right. You can negotiate yourself into a no cost refinance but it will cost you the best possible rate. It is advised that you run the numbers with your friendly neighborhood mortgage broker and find a scenario that best suits your needs.So, before you consider refinancing, please check the value of your home. Make sure to choose the right mortgage broker who has contacts with various lenders. Also, make sure to dig up your past documents and opt for the best rate and terms available. And lastly, shop, shop, shop for a no-cost refinance. Paying $0 for a refinance is beautiful. We can make it a reality. Please see our website and we can walk you through the refinance process and help you with all five steps listed.

Best Home Equity Loan – Where to Find the Best Home Equity Loan

If you are a first time home buyer you may be wondering, “What is the best home equity loan available for me?” The answer is that it depends on your circumstances. Below are a list of some of the types of loans that are available.Fixed Rate MortgageThe fixed rate mortgage is the most common type of loan available and it is usually a 30 year loan. Fixed interest means that the rate stays the same throughout the life of the loans, which means that they payment amount never changes so you’ll know what to expect to pay each month.Adjustable Rate Mortgage (ARM)The adjustable rate mortgage or ARM is also common, but less people choose to partake in it. The advantage is that the initial interest costs can be lower, but if the rates increase you may get a higher rate than you would have with a fixed rate. Then again your rate might stay the same or in same cases even go lower. The disadvantage to this type of loans is that when the periodic rate adjustments occur it can affect the amount that you pay back each month. So if you’re not expecting it your payment can increase. In the long run you might end up saving money with this type of loan, but you should have extra money in the bank just in case your mortgage payments change.Federal Housing Administration (FHA) and Veterans Administration (VA) MortgagesThese are federally backed loans for veterans and government workers. These are the typical fixed rate and adjustable rate loans. However these loans are low or no down payment. The VA loans are only available to those who have served military service, but the FHA loans are open to anyone who can qualify for one, but the requirements can be strict.The Internet has been an important game changer for the home equity loan market and because lenders are competing for borrowers on a massive scale it has led itself to lower rates. Some places that you should consider looking at are the LendingTree.com, LowerMyBills.com and the HomeLoanCenter.com Quicken Loans, Country Wide Home Loans, E-loan, Loan Web, and Net Bank. These will give you the best home equity loans at the most competitive rates.If you have good credit most of these lenders will offer 100% financing and some will offer up to 125%.If you want the best home equity loan then you will want to get a copy of your credit report before hand. Having a good score will help you to get the best rate available. You can do this at FreeCreditReport.com once a year.

Home Improvement: Home Equity Line of Credit versus Mortgage Refinance

Making home improvements, home remodeling, adding onto a home and debt consolidation are some of the most popular reasons people cash out on their home equity. But the question is, which should you choose, mortgage refinancing or a home equity line of credit (HELOC)?A mortgage refinance loan is when you replace your current mortgage with a new loan. People refinance their mortgages for a variety of reasons including, refinancing from adjustable rate mortgages (ARMs) to fixed interest rate ones, liquidating equity into cash (cash-out refinance) or to reduce monthly payments and extend the loan term. A mortgage refinance has the same costs as a mortgage, such as loan application fees, loan origination fees, and appraisal fees.A variable rate HELOC, where the interest rate and annual percentage rate (APR) can move up or down, depending on the Prime Rate published daily in the Wall Street Journal, is one of two popular second mortgage options, with the other being a home equity installment loan (HEIL). HELOC second mortgages provide you with the flexibility of borrowing all or part of your equity and you only pay interest on what you use unlike a HEIL or refinance. Because HELOCs work like credit cards, you can pay down your balance and borrow again without having to apply for a new loan. And, according to ehow.com, there are no closing costs for second mortgages, as there are with refinancing.If you have an adjustable rate or high interest rate mortgage that you want to refinance into a lower fixed rate while cashing out on equity for home improvements or other purposes, a mortgage refinance may work the best for you. However, according to ERATE.com, if the rate on your existing first mortgage is substantially lower than that of current market rates and if you have been making payments on your mortgage for a period of five years or more, then a second mortgage may be a more sensible financial solution than starting over with a new first loan.

4 Reasons NOT to Refinance Your Home

It is no secret that mortgage interest rates are at historically low levels, leading many homeowners to consider refinancing their mortgage. But it is important to remember that refinancing is not a contest to get the lowest rate. You need to decide if a refinance works fits your personal financial circumstances. Before deciding to refinance, find out the answers to the following four questions.1. Is the equity in your home declining? The foreclosure crisis has flooded the market with unsold and has driven home values down in almost all areas of the country. It is quite possible that even though you want to refinance, a lack of home equity may prevent you from doing so. Before paying several hundred dollars for an appraisal, ask the real estate agent who sold you the house what they it is worth in today’s market. Then your mortgage lender can help you decide whether or not it even makes sense to apply for the refinance.2. How much are the closing costs? When you consider the cost of the appraisal, the new title insurance, and fees to your lender, the cost of your new mortgage may exceed any savings you can expect from the lower interest rate. To determine how many months you would need to stay in your home before you recover your upfront costs, take the monthly savings from your new monthly payment and divide that number into the total closing costs being disclosed by your lender. Is that a realistic time frame for your circumstances?3. What is the new loan term? If you only have 20 years left on your current mortgage and you refinance a new mortgage over 30 years, you have just gone backward 10 years. You may have improved your monthly cash flow, but put your retirement off by another 10 years.4. How certain is your future? Life has become a bit iffy for all sectors of the workforce. Jobs aren’t stable, entire industries have disappeared in the last three years, and unfortunately, the divorce rate remains high. Any of these factors could lead to selling your home sooner than you had anticipated, in which case, the benefits of the refinance have gone down the drain.If refinancing your mortgage does not make sense right now, consider taking the money you would have spent on the refinance and put it against the principal balance of your existing mortgage. Every thousand dollars that you reduce your mortgage balance makes the interest rate less and less of a factor. So stop comparing mortgage interest rates at your neighbors and start focusing on your overall financial health.