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Archive for June, 2010
Or those same details might spur the hom….
by Admin on June 30th, 2010
Or those same details might spur the homeowner to contemplate yet another home equity line of credit.
The name itself sounds too good to be true.
Choosing An Adjustable Rate Mortgage
By Dane Pearson
Adjustable rate mortgages (ARMs) are appealing to many homebuyers, but what are the risks?
An adjustable rate mortgage is one in which the rate changes based on the market interest rates. The rate will adjust on a specific schedule, say once a year, after an initial fixed period. Fixed periods range from six months to five years. Some may have even longer fixed periods.
The risk in an ARM comes from having a payment that can change significantly. When you have a fixed rate mortgage, you know that your payment will be the same now, ten years and twenty years later. The payment doesn’t change because the interest rate is fixed.
When you choose an adjustable rate mortgage, you accept the risk of a rising payment in return for a lower initial interest rate. This rate is usually much lower than the market rate for a 30-year fixed rate mortgage. The more risk you accept, the lower your initial interest rate. The more adjustments the loan will go through, the more risk. The traditional thinking is that even after a loan adjustment, the rates will be lower than those offered to new borrowers for 30-year fixed mortgages. However, it does happen where this gap closes, especially in periods of rising interest rates.
The best time to get an ARM is when interest rates are on the decline. Despite the risk, an ARM can be beneficial to certain borrowers. While most advisors will tell you that a fixed-mortgage is the way to go in every situation, there are times when you should consider an adjustable rate.
1. The borrower needs extra cash for a while.
A lower initial fixed rate gives you more money in your pocket early in your loan term. For example, a one-year ARM with a 30-year term and a rate which adjusts once a year on the anniversary of the loan date comes with zero points and an initial rate of 5.625%. Let’s compare that to a 30-year fixed rate mortgage with no points and a fixed rate of 7.625%.
If you take out a $240,000 mortgage, the 30-year fixed rate payment would be $1,698.70 each month. The one-year ARM would have a monthly payment of $1,381.58. That’s a difference of $317 a month.
You could use that extra $317 to pay off your credit cards, make improvements to the home or save for retirement. But you want to make sure that you will maintain a lifestyle that can afford for your payment to increase. You don’t want to find that you cannot afford a higher mortgage payment when the rate adjusts upwards.
2. Buy more home.
Because of the lower initial interest rate, you can qualify for a larger mortgage amount and a more expensive home. Many homebuyers secure a one-year ARM with the purpose of refinancing them later. The low rate allows a more costly home, but a low mortgage payment. But remember that refinancing comes with closing costs. Do the math to see if you are really saving any money.
3. It all depends on the future.
If you plan to move or upgrade in the next few years, an ARM is a wise decision. You can benefit from a lower rate mortgage and simply sell the home and buy another before the rate adjusts. For example, if you plan to move in three years, why not go in for a five-year adjustable mortgage. You get a lower rate that won’t adjust while you own the home, as long as you sell during the initial rate period.
Make sure that the loan comes with no prepayment penalties. Make sure that you do some math. If interest rates go up drastically in those three years, when you buy a new home, you will be facing the higher interest rates. This could mean that you are unable to really upgrade to a larger or more expensive home.
Adjustable-rate mortgages are basically all about weighing the risk. You are getting a lower interest rate and payment for taking the risk of having to pay a lot more in the future. Some homeowners are experiencing this right now as foreclosures are on the rise. Many homeowners failed to calculate how much their mortgages could adjust to. Some have seen large increases that they are unable to afford. Do all of the math and always prepare for the worst case scenario when considering an adjustable rate mortgage.
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If you already own a home, and had some ….
by Admin on June 30th, 2010
If you already own a home, and had some financial difficulties a subprime loan may help you to regain your credit status.
If you are looking for bad credit help, take caution!
Plan your financial future with a mortgage calculator
By Len Harges
With property prices rising steadily, and lenders still reluctant to offer big mortgages to first time buyers, there has never been a more difficult time to be a first time home buyer. However, the outlook is improving as the economy recovers.
As a rule of thumb, the majority of lenders will be prepared to lend you up to two and a half times your gross annual income. For example, if you were earning 50,000GBP per year, you would probably be able to get a mortgage for around 125,000GBP.
Before you begin house hunting, it is worth finding out roughly how much a mortgage is going to cost you, and how much you can expect to be offered by a lender. To this end, an online mortgage calculator can come in very handy, although calculations can vary between lenders.
Mortgage calculators tend to use quite a few mortgage specific phrases, such as front end ratio and debt to income ratio, to describe their parameters. If you want to get a useful result from a mortgage calculator, you will have to know what all these terms represent.
The front end ratio of a mortgage is the fraction of your annual gross income that the buyer will spend on mortgage payments. As a general rule, this should not be more than a third, although some lenders offer more than forty percent. Mortgage payments consist of four components: principal, interest, taxes, and insurance, sometimes shortened to PITI
The back end ratio, also known as the debt to income ratio, is the percentage of your gross income that goes towards paying off debts such as credit cards, personal loans, child support, and the mortgage itself. Most lenders will insist that this does not exceed 36 percent of the borrowers total gross income.
During the darkest days of the recession, some lenders were refusing to offer mortgages with a deposit of less than fifty percent. However, things have returned to something approaching normality now, and most of the time you will be required to pay around twenty percent up front, and sometimes even less.
One way to significantly improve your chances of getting a larger mortgage is to buy a property with someone else, such as a friend or a partner. This way, your gross incomes can be combined, so you can get a larger mortgage than you could otherwise manage. Another way is to put down a larger deposit, which effectively shrinks the mortgage itself.
This guide to mortgage calculator terms was written by Len Harges. The Alliance and Leicester website contains a mortgage calculator to help you work out how much a potential mortgage loan will end up costing you.
Money saving tips for mortgages
By Len Harges
People who have taken out a large mortgage in order to fund a property purchase can sometimes become very stretched financially when interest rates rise. However, you can protect yourself from rising interest rates by taking out a fixed rate mortgage.
In general, fixed rate mortgages tend to be a little pricier than discounted variable rate or tracker mortgages, although they are a lot easier to budget for. However, you should keep an eye on the fees, which can be a lot higher than you would expect on some of the more tempting fixed rate deals.
The vast majority of fixed rate deals last for about a couple of years, and then the mortgage will switch to the standard variable rate of the lender. You can get fixed rate deals that last a lot longer than this, but they tend to be expensive, and quite difficult to get out of.
If you are going to be tied to a deal for a long time, you have to make sure that it can be transferred if and when you decide to move into a different property. If you need to borrow extra money to do this, you will usually have to go through the same lender if you want to avoid high charges.
Discounted variable rate mortgages tend to be the cheapest deals, at least initially. They are usually tied to the lenders standard variable rate, but with an additional discount for a certain period.
Discounted variable rate mortgages are almost always the cheapest option when you take them out, but interest rate changes can cancel out these savings over time. Currently, there are very few discounted variable rate mortgages available, as the base rate is so low anyway.
Lenders make most of their money from borrowers who do not switch their mortgage once the initial special offer period has ended, but if you can be bothered switching your mortgage, you can save large amounts of money over the course of your mortgage.
You may find that some deals with a temporary discount have a contractual clause that forbids you from switching to another supplier for a number of years after the deal has ended, so it might be worth bearing this in mind when you are choosing a mortgage.
Len Harges wrote this article about mortgages. Visit the Alliance and Leicester website for great deals on fixed and variable rate mortgages.
Things That Your Bank Do Not Tell You About Mortgage Quotes
By Dane Pearson
Shopping for a house is probably the most significant financial decision that you will make in your life. When you shop for your home by first attaining a home mortgage quote, your decision becomes even more momentous-you need to perform a balancing act between the house of your dreams and factors such as the down payment and interest rate payable.
Your first stop in this process will probably be your bank. This is the most obvious option, but may not always be the right one; there are things your banker will not tell you about a home mortgage quote. In other words, the home mortgage quote that is good for your banker may not be the best one for you.
Prevailing interest rates
Take the issue of interest rates. Rates fluctuate according to market exigencies. When you start your negotiations for a home mortgage quote, the interest rate might be higher than at the time you actually avail the loan. You must keep a track of such fluctuations, and induce the bank to provide you with the advantage of the prevailing rate. Your lender may not tell you this, but the difference could mean several hundred extra dollars. Therefore, it is always a good practice to consider alternative information sources before finalizing the home mortgage quote, and then compare rates on offer. With easy access to the Internet, you can even generate online quotes from web sites. This exercise will help you prepare well for negotiating with your banker regarding the interest rate.
Mortgage tenure
The mortgage tenure is another important question that you need to query. From the point of view of the bank, a 30-year fixed rate is most suitable because it can bring in returns of up to 4-5 percent for the bank. However, is it good for you? If you are looking to refinance in a period of about seven years, a 30-year rate is a disadvantage because you would be keeping the loan for only seven years.
Hidden fees and levies
Once you have finalized the purchase of the house and the interest rate with the bank, you would think that getting the right home mortgage quote is guaranteed. However, you need to watch out for those hidden fees or “add-ons”, which your banker might not have explained at the outset: loan processing fees, warranties, insurance, and the like. It always pays to put these issues on the table before finalizing the home mortgage quote.
Disproportionate service charges
In your market research for the right home mortgage quote, your focus is obviously the lowest interest rate. However, this should not be your only guide because some banks attract customers with the offer of a low rate, but may levy charges for services that are non-existent. A real-world experience is of a Fairfield, Conn., graphic designer who discovered that his bank charges fees for services such as lender inspection and notary at a rate much higher than normally acceptable. It is a prudent step to compare the complete fee package before committing to a quote. It is important to remember that lenders often offer to waive a particular fee levied by your bank in an effort to close the deal. So, it is important to recognize such opportunities and press home the advantage.
Besides raising these factors, you must also consider issues that are more closely related to your personal decision-making capacity, and for which no banker can tender advice:
Be sure of the reasons for buying a house.
Ensure that the size of the house is right for you.
Choose the right time in the year to buy a house (there could be a particular time in the year when home prices drop, depending upon your location).
If you decide to involve a real estate agent in procuring your home mortgage quote, find the right estate agent and be aware of his/her commissions.
Select the location of the house carefully keeping in mind resale value.
Inspect the house thoroughly, identifying problem areas and factoring them into the price.
Getting a home mortgage rate that suits your requirement is one aspect, living with it is another. However, once you have understood the operating market forces in this arena, you will go a long way toward successful management of both these aspects.
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A “bad credit home loan” is a loan that ….
by Admin on June 28th, 2010
A “bad credit home loan” is a loan that one can get despite having a bad credit rating.
So, even before you start looking for the best mortgage rate, you need to decide on what tenure of loan you would want to go for and then decide on the type of mortgage (fixed/ adjustable) based on the duration for which you intend to stay in the house.
Finding Out What Is A Mortgage Fraud For Profit
By Dane Pearson
The Story:
In 2007, Sally was having trouble keeping up with her mortgage payments, and by September, she received a foreclosure notice in the mail. A few days later, she was called by a man who said he could help. He said she could have a check for $40,000 to help pay her bills, and she wouldn’t have to worry about foreclosure any more. Sally signed papers in late October at a title company in Maryland. She went home with a $40,000 check and started making her new house payments to District Properties in December. Nine months later, Sally started having trouble making her house payments again. This time, instead of a foreclosure letter, she received an eviction letter in the mail. Sally gradually realized that she no longer owned her home; she was simply a renter. In a panic, Sally called District Properties. The man who answered the phone told her that Subprime Mortgage Co. held two loans against the house, one for $264,000 and one for $66,000, but she could buy her house back for $360,000 - three times the mortgage she had a year earlier. Sally’s income and credit were not good enough to buy her house at that price. The man said, “I’m sorry” and hung up.
The Profile:
Like hundreds of District residents, Sally became a victim of mortgage fraud for profit, sometimes called “equity skimming.” The scheme she fell victim to was orchestrated by a variety of people, including a mortgage broker, real estate agent, appraiser, “investor,” “straw buyer,” and “bird dog.” Each person in the scheme received a portion of the equity in Sally’s house. In the end, Sally lost her house, Subprime Mortgage Co. foreclosed, and the group that orchestrated the fraud made more than $100,000.
This fraud is different from predatory lending, in part because Sally never made a loan. Predatory lending typically involves a single loan with extremely high fees and a high interest rate made to a homeowner or legitimate purchaser. Mortgage fraud for profit is typically a more complex scheme involving an inflated appraisal, falsified loan applications, equity skimming, property flipping, and sometimes identity theft. The borrower is typically a straw buyer, who never intends to occupy the house. The mortgage payment is paid by the investor, or a company controlled by the investor. Eventually, the investor stops making mortgage payments, forcing the lender to foreclose, or sells (”flips”) the house for additional profit.
In a typical mortgage fraud for profit scheme, a bird dog looks for distressed houses by checking public real estate records and driving around targeted neighborhoods. When a house is identified, the bird dog reports the address to the investor and receives $1,000 or so for the service. A straw buyer, who is a person with good credit or a falsely inflated credit score, poses as a buyer. In some cases, a straw buyer is a stolen identity; the person whose name is stolen may discover the theft when credit is denied or the purchase appears on a credit report. In some cases, a straw buyer is a participant in the scheme - a professional straw buyer. In many cases, however, a straw buyer is a person who hears by word of mouth through family, friends or co-workers that someone will pay $5,000 to $10,000 for the use of his or her name. As with most financial arrangements that seem too good to be true, a one-time straw buyer often finds that things do go wrong: his credit may be ruined because the mortgages are not paid, he may be investigated by law-enforcement for fraud, or he may be charged with conspiracy.
In addition to bird dogs and straw buyers, a mortgage broker and appraiser are important participants in a mortgage fraud for profit. Usually, both are active participants in the scheme and receive money for falsifying documents. Other industry professionals who play an important role are employees of a title company who create closing documents and disburse funds after a sale is completed. Professionals who have access to credit report databases or software that generates W-2 forms and pay stubs also participate in the scheme. As reported in the 2006 FBI Financial Crimes Report, 80 percent of all reported mortgage fraud losses involve industry insiders. Perhaps this is why mortgage fraud for profit has become so prevalent throughout the country. A homeowner facing foreclosure is easily convinced by a professional mortgage broker, for example, that he should sign contracts that convey his house to someone else. People tend to trust professionals in the financial industry. This is one of the reasons that government regulations requiring financial industry professionals to maintain specific standards are so crucial for the protection of consumers.
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Offers That May Trigger Your Mortgage Application
By Dane Pearson
If you apply for a mortgage, your inbox, answering machine, and mailbox may fill up quickly with competing offers from other mortgage companies. It’s not that the company you applied to is selling or sharing your information. Rather, it’s that creditors - including mortgage companies - are taking advantage of a federal law that allows them to identify potential customers for the products they offer, and then market to them. The Federal Trade Commission, the nation’s consumer protection agency, wants you to know why your application for a mortgage may trigger competing offers, how you can use them to your benefit, and how to stop getting them if that’s your choice.
The unsolicited calls, emails, and letters about competing offers often are called “prescreened” or “pre-approved” offers of credit. They are based on information in your credit report that suggests you meet criteria set by the creditor making the offer - for example, you live in a certain zip code, you have a certain number of credit cards, or you have a certain credit score. Credit bureaus and other consumer reporting companies sell lists of consumers who meet the criteria to insurance companies, lenders, and other creditors.
When you apply for a mortgage, the lender usually gets a copy of your credit report. At that point, an “inquiry” appears on your report showing that the lender has looked at it. The inquiry indicates you’re in the market for a loan. That’s why mortgage companies buy lists of consumers who have a recent inquiry from a mortgage company on their credit report. Federal law allows this practice if the offer of credit meets certain legal requirements.
Clearly, some mortgage companies benefit from the practice. Consumers can benefit, too: prescreened offers can highlight other available products and make it easier to compare costs while you carefully check out the terms and conditions of any offers you might consider.
Still, some people may prefer not to receive prescreened offers of credit and insurance at all. Here’s how to stop them:
Call 1-888-5-OPTOUT (1-888-567-8688) and you will be asked to provide certain personal information, including your home telephone number, name, Social Security number, and date of birth. The information you provide is confidential, and will be used only to process your request to opt out.
Opting out of prescreened offers does not affect your ability to apply for credit or to get it. Your opt out request will be processed within five days, but it may take up to 60 days before the prescreened offers stop coming. If you have a joint mortgage, both parties need to opt out to stop the prescreened offers. If or when you want to opt back in, use the same telephone number.
Put your phone number on the federal government’s National Do Not Call Registry to reduce the telemarketing calls you get at home. To register your phone number or to get information about the registry call 1-888-382-1222 from the phone number you want to register. You will get fewer telemarketing calls within 31 days of registering your number. Your number stays on the registry for five years, until it is disconnected, or until you take it off the registry.
Many companies use other tools to identify marketing prospects, and that the Do Not Call Registry won’t shield you from all telemarketers - for example, those with which you have a business relationship. Even if you opt out of prescreened offers and put your number on the National Do Not Call Registry, you can expect some unsolicited offers.
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Can you save money refinancing your mortgage now and what are the key points to ponder .
By Emily Harrison
Current interests are at decade lows and many are thinking of refinancing their homes. One cannot speculate were interest rates will be in six months or even a year. Chances are on the side that interest rates will gradually rise in the future, but when no one is certain despite the continued weakness in the housing market. Therefor, it may wise to start considering mortgage home refinance and not assume the risk that interest rates will stay the same or move lower in the near future.
Some points that you should consider when thinking about mortgage home refinance are as follows.
Current Mortgage rates Are they at least 1% point less than your existing mortgage? This interest differential is were mortgage home refinance starts become logical, more than 2% differential, then its a no brainer.
Type of Loan If you have and adjustable rate mortgage which is due to reset its a great time to consider refinancing given the low interest rate environment..
Equity The mount of equity is important because having 20% or greater equity will allow you to get rid of Private Mortgage Insurance (PMI). Eliminating this insurance can possibly save you anywhere from $70 to $150 a month.
Credit Score You need to look at your debt to income ratio and conclude if it has reached the maximum. Then refinancing could possibly increase your credit score by freeing up income and reducing the monthly payment amounts on your basic bills. Lowering your debt to income ratio will help improve your credit.
How long have you been in your home? If you now have a large expense to pay, such as college tuition or medical bills, taking money out from a mortgage home refinance is an option. This is a sound idea because other ways of borrowing have higher interest rates and as a result cost.
Using equity from mortgage home refinance is also and effective debt consolidation tool to effectively decrease the minimum monthly payments on debt and save a significant amount of money on credit card debt.
The cost involved in refinancing must be included when making a decision if mortgage home refinance is for you. Get professional help or do the research to evaluate if mortgage home refinance makes sense and the ensuing cost savings by doing so.
There are many alternatives to refinance and that’s why we recommend you seek the advice of a professional to get the most out of your mortgage refinance.
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Mortgage is the biggest and the most imp….
by Admin on June 26th, 2010
Mortgage is the biggest and the most important financial transaction in the life of most people.
Higher interest rates would mean you may have to settle for a bit smaller home than you originally had planned.
They want to see this because it will give them a better idea of your gross income.
Finding Out What Is A Mortgage Fraud For Profit
By Dane Pearson
The Story:
In 2007, Sally was having trouble keeping up with her mortgage payments, and by September, she received a foreclosure notice in the mail. A few days later, she was called by a man who said he could help. He said she could have a check for $40,000 to help pay her bills, and she wouldn’t have to worry about foreclosure any more. Sally signed papers in late October at a title company in Maryland. She went home with a $40,000 check and started making her new house payments to District Properties in December. Nine months later, Sally started having trouble making her house payments again. This time, instead of a foreclosure letter, she received an eviction letter in the mail. Sally gradually realized that she no longer owned her home; she was simply a renter. In a panic, Sally called District Properties. The man who answered the phone told her that Subprime Mortgage Co. held two loans against the house, one for $264,000 and one for $66,000, but she could buy her house back for $360,000 - three times the mortgage she had a year earlier. Sally’s income and credit were not good enough to buy her house at that price. The man said, “I’m sorry” and hung up.
The Profile:
Like hundreds of District residents, Sally became a victim of mortgage fraud for profit, sometimes called “equity skimming.” The scheme she fell victim to was orchestrated by a variety of people, including a mortgage broker, real estate agent, appraiser, “investor,” “straw buyer,” and “bird dog.” Each person in the scheme received a portion of the equity in Sally’s house. In the end, Sally lost her house, Subprime Mortgage Co. foreclosed, and the group that orchestrated the fraud made more than $100,000.
This fraud is different from predatory lending, in part because Sally never made a loan. Predatory lending typically involves a single loan with extremely high fees and a high interest rate made to a homeowner or legitimate purchaser. Mortgage fraud for profit is typically a more complex scheme involving an inflated appraisal, falsified loan applications, equity skimming, property flipping, and sometimes identity theft. The borrower is typically a straw buyer, who never intends to occupy the house. The mortgage payment is paid by the investor, or a company controlled by the investor. Eventually, the investor stops making mortgage payments, forcing the lender to foreclose, or sells (”flips”) the house for additional profit.
In a typical mortgage fraud for profit scheme, a bird dog looks for distressed houses by checking public real estate records and driving around targeted neighborhoods. When a house is identified, the bird dog reports the address to the investor and receives $1,000 or so for the service. A straw buyer, who is a person with good credit or a falsely inflated credit score, poses as a buyer. In some cases, a straw buyer is a stolen identity; the person whose name is stolen may discover the theft when credit is denied or the purchase appears on a credit report. In some cases, a straw buyer is a participant in the scheme - a professional straw buyer. In many cases, however, a straw buyer is a person who hears by word of mouth through family, friends or co-workers that someone will pay $5,000 to $10,000 for the use of his or her name. As with most financial arrangements that seem too good to be true, a one-time straw buyer often finds that things do go wrong: his credit may be ruined because the mortgages are not paid, he may be investigated by law-enforcement for fraud, or he may be charged with conspiracy.
In addition to bird dogs and straw buyers, a mortgage broker and appraiser are important participants in a mortgage fraud for profit. Usually, both are active participants in the scheme and receive money for falsifying documents. Other industry professionals who play an important role are employees of a title company who create closing documents and disburse funds after a sale is completed. Professionals who have access to credit report databases or software that generates W-2 forms and pay stubs also participate in the scheme. As reported in the 2006 FBI Financial Crimes Report, 80 percent of all reported mortgage fraud losses involve industry insiders. Perhaps this is why mortgage fraud for profit has become so prevalent throughout the country. A homeowner facing foreclosure is easily convinced by a professional mortgage broker, for example, that he should sign contracts that convey his house to someone else. People tend to trust professionals in the financial industry. This is one of the reasons that government regulations requiring financial industry professionals to maintain specific standards are so crucial for the protection of consumers.
Information on ming fern can be found at the Growing Ferns site.
Things That You May Not Know About Consolidating Student Loans
By Julio Trujillo
Refinancing education loans can be so simple and attractive that many borrowers tend to overlook some critical points about student loan refinancing. Sometimes what you don’t know can save you a great deal of money, time, and frustration. Below you’ll find a few little know facts that can save you big bucks when refinancing your education loans.
Consolidation Loans have a fixed interest rate versus a variable interest rate
Most education loans have a variable interest rate which can mean significant changes in the monthly payments if interest rates increase as they did on July 1st, 2006. With a fixed interest rate, the monthly payments and total payoff balance is a set amount. Some education loans such as the Perkins Loan and the HPSL (Health Professionals Student Loan) are fixed rate loans. Before consolidating it’s important to weigh the repayment benefits of rolling these kinds of loans into the consolidation.
Consolidation lenders vary significantly in terms of money-saving incentives
What separates one lender from another when it comes to consolidating education loans are the types of incentives each offers. Lender incentives can greatly reduce monthly payments and the total amount owed over the lifetime of the loan. Many lenders offer incentives for auto-debit payments, but rarely more than .25%. Another standard incentive is a 1% reduction in interest rates after 36 months of on-time payments. When shopping for a lender to consolidate your education loans, look for one that goes above and beyond these standards. ScholarPoint for example, offers an auto-debit interest rate discount of .50% and a 1% reduction in interest after only 24 months, a full year earlier than the norm.
Your loans must be current in order to consolidate education loans
If you’re behind on your loan payments, you’ll need to get caught up before refinancing. Once you refinance, you’ll most likely enjoy much lower monthly payments to ease your budget once you are caught up.
Private education loans and federal education loans cannot be combined when refinancing
While federal student loans are funds lent by the government, private student
oans are those offered by independent lenders and tend to have a higher rate of interest. Those who have both types of education loans will need to secure 2 different consolidation loans. It’s best to consolidate federal education loans first and then start the process of consolidating your private education loans. You can however, consolidate federal subsidized and unsubsidized loans together. They do need to be tracked separately, but a quality lender will take care of this for you.
Your deferment and forbearance limits start over when you consolidate
One of the most important benefits of education loans is that they allow students to put their loans in to deferment or forbearance status during difficult times encountered while building their careers. When you refinance, you are essentially getting a whole new loan, meaning that your deferment and forbearance limits are reset.
Consolidating during the post graduation grace period allows you to lock in the lowest rate
Interest rates during the grace period (6 months after graduation) are .60% lower than after the grace period when loans move into repayment status. Consolidating before the grace period is over helps to lock in this much lower interest rate. It’s best to start the consolidation process soon after graduation to ensure that there is adequate processing time. You can specify that your new consolidated loan begin at the end of your grace period so that you may enjoy both benefits.
Borrowers can no longer reconsolidate student loans
For many years, borrowers have had the opportunity to reconsolidate their education loans if they were unhappy with their lender or found a better loan offer elsewhere. As part of the Federal government’s July 1st 2006 student loan changes, borrowers now face major restrictions when it comes to finding a new lender for already consolidated loans. Unless you plan to take out new loans that would allow you to reconsolidate, it pays to shop around and find a lender you are going to be happy with because you only have one opportunity to consolidate.
Refinancing education loans is one of the easiest ways to lower monthly bills and make paying back your college education affordable. Keeping these little known facts in mind can save you a great deal of money and make consolidating your education loans a smooth and simple process.
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