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Federal Student Loan Consolidation

Federal Student Loan Consolidation

What to Know about Federal Student Loan Consolidation


In the United States, the FDLP or the Federal Direct Student Loan Program is a program that allows include federal student loan consolidation, which can allow consolidation of a variety of federal student loans, such as Stafford loans and PLUS loans, into one simple loan. Federal student loan consolidation results in smaller monthly payments for the borrower and a longer repayment term for the consolidated loan. Unlike the individual loans, a consolidation loan has a fixed interest rate for the entire length of the loan. 
The purpose of federal student loan consolidation is like that of a mortgage refinance in the sense that interest rate or monthly payments are ultimately lowered. Federal student loan consolidation services are available for all federal loans. This includes such as unsubsidized and subsidized Direct and FFEL Stafford Loans, Supplemental Loans for Students (SLS), Direct and FFEL PLUS Loans, Health Education Assistance Loans, Federal Nursing Loans, Federal Perkins Loans, and certain existing consolidation loans. 
The Federal Loan Consolidation Program was first started in 1986. In 1998, the U.S. Congress adjusted the interest rate to have it set as a fixed rate weighted mean. Any loans that underwent Federal student loan consolidation before this time could still have a variable interest rate that was set by the particular FDLP loan origination center or FFELP lender.
In 2005, the GOA or Government Accountability Office considered consolidating these consolidation loans so they could be exclusively managed by the FDLP. However, calculations and assumptions about future changes in the loan volume, percentage of defaulters, and interest rates resulted in the estimate of an additional cost of $46 million for administrative costs which would then be offset by a savings of $3,100 million. However, the financial turmoil of 2008 resulted to the suspension of various loan consolidation programs, such as Nelnet, Next Student, and Sallie Mae. 


Federal Student Loan Consolidation Restrictions
Nearly all federal education loans can be consolidated, but there are a few set restrictions on student loan consolidation.
Federal student loan consolidation can only be used once. In order for an existing consolidation loan to be eligible for reconsolidation, more loans must be added that were not previously consolidated into the original student consolidation loan. After 2006, an individual consolidated loan could not be consolidated by itself. 
The new restrictions concerning consolidating a consolidation loan obstruct the ability to use consolidation when switching lenders. Usually, loans can consolidate once, near the completion of the grace period given for the loan or once the original loan goes into repayment. It is then locked into that particular lender for the total time of the loan. In order to maintain the ability to use various student loan consolidation services later on when switching lenders, it is ideal not to include at least one loan from the federal student loan consolidation process in order to maintain eligibility for reconsolidation.
When a consolidated loan is reconsolidated into a new loan, this process does not relock the interest rates on the new consolidation loan. Rather, the consolidation loan is thought of as a fixed rate loan when recalculating the weighted average interest rate that is then applied to find the new interest rate for the consolidation loan. 
Federal Student Loan Consolidation Repayment Plans


Federal student loan consolidation gives access to many different repayment plans along with the standard 10-year repayment plan. Some of these different repayment options include income sensitive repayment for FFEL loans, contingent repayment for direct loans, graduated repayment, and extended repayment. 
Federal student loan consolidation can also reduce the total cost of the monthly payment by increasing the repayment period of the loan beyond the standard 10-years as normally stated in terms of various student federal loans. Depending on the total amount of the loan, the repayment period of the new consolidated loan can be furthered anywhere from 12 years to 30 years. The smaller monthly payment can make it less financially stressful on the borrower to repay but will result in an increased cost of interest paid over the loan’s lifetime. 

Loan Consolidation

Loan Consolidation

A Short Guide to Loan
Consolidations


Most financial professionals consider loan consolidations as
the purchase of many different loans by a single entity or company in order to create
one large single loan. This idea behind loan consolidations is that company purchasing
the loans gets them from the other financial companies at a particular agreed.
The companies selling the loans make a small amount of money from this transaction.
The new company then takes on a series of new debts that must be paid. They
then levy their payment schedule and interest rate, and from here borrower pays
the company the new interest rate along with the principal of the loan.

The system of loan consolidations works in the same fashion
for student loans except that in this case, the intention of the companies is
usually much more altruistic. The student loans are offered by various companies
that are often government-backed and publicly held.  While the same essential system is used for
students in loan consolidations, there are still some downsides or wrinkles
that impede the system. There are many different types of student loans and a
variety of loan issuers. Each one of these issuers has varying rates and
structures that set down specifically how the loan is given out or disbursed,
and just how the loan must be repaid. Because of this, it makes loan
consolidations truly difficult to do.

What to Look for in Loan
Consolidations


While loan consolidations’ terms and eligibility vary
between issuers, there are some general tips to follow when thinking of loan
consolidations.

Loan consolidations are best applied when the individual
loans start entering the repayment periods, typically six months after
graduation, or during the period when a student stops attending an educational
institution. This is also the time when the new graduate has a chance to see
just what their near financial future looks like and if it would be a better
decision to stay with the set 10-year payout which results in less interest, or
if loan consolidations would help for the sake of reducing monthly payments and
the price of overall increasing the loan.

Traditional loan consolidation was used more often when
student loans were set to a prime rate. If a student took out a loan at 7.2%,
and this primate later dropped after he or she started paying, the student
could choose to apply for consolidation which would create a new loan with an
ideally lower interest rate. Today, student loans are just set to a fixed rate,
although loans that were issued in 2010 had lower rates than loans issued a few
years earlier, making consolidation a way to lower the rate.

Loan consolidations can happen at any point of the life of
the loan, but the amount of possible consolidations is very limited. A change
in financial circumstance can necessitate needed changes in a loan. The idea is
to keep track of how loans fit into a person’s budget and just how loan consolidations
can benefit a customer.

Investment Property Loans

Investment Property Loans

What are Investment Property Loans?

When an individual purchases property that will not be used as a place for residence, but rather for profit, the property is considered an investment property. It can be very expensive to personally fund these real estate investments, especially for beginners who often do not have the funds to pay off an investment property fully. Because of this, these investors need to obtain funding for other sources. They can use investment property loans in order to avoid going into their own funds.

Investment property loans can be used for different types of investment properties such as:

Short term rental properties: These properties are often used for vacations.

Long term rental properties: These properties are often rented out by individuals who do not have the financial steadiness to own a home.

A home near the individual’s primary residence: This home is not purchased with the intent to be resold or rented out.

What Affects the Rates of Investment Property Loans?

There are many different factors that can affect the mortgage rate for the investment property loan.

Investment property loans that do not have a down payment in the contract are also known as an 100% mortgage. While there is no initial down payment, these loans may have a higher interest rate.

The location of the rental property greatly affects the rates of investment property loans. If the property is within a good neighborhood that also has low vacancy rates, the lender assumes that the individual receiving the loan can follow the payment schedule, which allows the lender to give a lower rate.

If a rental property already contains a tenant who is dependable and who pays a monthly rental amount that is greater than the mortgage payments on the property, a lender is more inclined to give a better rate. When a house must be fixed up before reselling, the lender must be assured that the individual can do the repairs while making the monthly payments when the home has not been sold.

How to Get Investment Property Loans

The first step in investment property loan shopping is to just look around and get an idea of the interest rates in investment property loans. Doing so can help ensure the best deal as well as improve chances of getting approved.

Next step in getting investment property loans is to simply apply. After finding a lender, they will give a loan application that requires certain pieces of personal information. This application will then be verified. The lender will often look at a credit report and income or even how much cash the individual has on hand.

Finally the lender will make sure that the individual has enough cash for the down payment. Most investment property loans usually ask for at least 25% for this down payment, although some request up to 35% due to the riskiness of investment property loans.

 

Become an Expert on Loans!

Become an Expert on Loans!

What are Loans?
Loans are defined as any product, item, or service that is offered to an individual to substantiate the lack of sufficient possessions, assets, or monies required to obtain or purchase a product or service existing outside of respective means; the nature of Loans are inherent within the implicit expectation of repayments. An individual – known as a lender – who loans another individual – known as the borrower – any object of value can establish the conditions in which the loan in question must be repaid – this can include an expressed time frame, full or partial repayment, and any interested incurred contingent on the gross value of the loan itself. 

Legal Terminology and Loans
Within the realm of legality surrounding Loans, the following terminology is not only common within the establishment of a loan, but also within its respective collection process:
Interest: Interest is defined as an expressed and established percentage of the gross value of a loan that is added to the full amount of repayment that is required for the satisfaction of a loan; interest can be accrued in a variety of methods, including the duration of repayment, as well as the initial, gross value of the loan in question
Default: The classification of Loans in default – or defaulted Loans – is defined as the failure to provide for repayment of the loan in question. Typically, loans will include pre-agreed conditions fashioning the repayment process; in the event that an individual is unable – or unwilling – to satisfy outstanding debt with regard to loans, those loans are considered to be in a state of default
Debt: Debt is classified as a financial circumstance in which the gross amount of outstanding monies, assets, or valued owed outweighs the gross value of assets, income, or monies in possession of that individual; debt is incurred as a result of the inability – or unwillingness – to satisfy the repayment of Loans
Surety Loans: Surety Loans are types of loans that are formulated with the addition of a third party in addition to borrower and the lender. Surety loans allow for heightened insurance with regard to the lender with regard to the reduction of the risk of failure to satisfy any or all loans. Surety Loans include the following:
The Principal is the entity who has received a loan
The Obligee is the entity who has disbursed the loan
The Surety – or guarantor – is the entity who has cosigned for the loan disbursed; in the event of the Principal’s failure to repay the loan, the responsibility of repayment will become that of the Surety


Loans, Debt, and Collection
In the event that a lender is unable to be repaid for loans disbursed, a variety of options exist within the methodology available to reduce the risk of financial loss:
Lenders in ownership of debt belonging to consumers who have incurred loans in default alert Collection Agencies with regard to defaulted loans; this can result in the negotiation – and subsequent – transfer or sale of a respective loan. This transaction allows the Collection Agency to become the legal, rightful owner of defaulted loans in question, thus making them responsible for arranging repayment
The creation of a contingency repayment plans for defaulted loans may facilitate the repayment of loans; this can take place through the institution of scheduled payments, the consolidation of the preexisting debt into a smaller – or more manageable amount, or a single, lump-sum settlement

Grants for Women

Grants for Women

Grants are funds (monies) disbursed by one party—typically a Government Department, Foundation or Corporation—to another for the purpose of continuing education or funding a business’ endeavor. In order to secure a grant, a form of “Grant Writing” is usually required. In the United States, grants are primarily delivered from Government departments, private trusts and foundations. 
Business Grants for Women:
Business grants can come in various ways and will oftentimes be offered to specific groups of people bolster diversity in the economic market, as well as to promote equal opportunity initiatives to those seeking to start a new business. The following list provides examples of popular avenues for business grants for women, as well as the attached qualifications for securing the funding:
The United States Federal Government does not provide grants for women to start or expand a small business. Grants for women are typically provided by private investors or non-profit organizations. That being said, the Small Business Administration offers educational resources and provides information on several Federal and local loan programs specifically available for women business owners. 
Private Grants for Women:

Private grants are funded by individuals– typically entrepreneurs or family members/loved ones of the business owners—or private organizations to increase a business owner’s available cash. The funds provided by the individual. This funding is typically secured by women who have shown a remarkable skill or who have developed an innovative product or service that bolster’s the well-being of their surrounding community. Private grants are delivered at the discretion of the individual or organization that provides the funding; these grants may be delivered by a foundation. 

Corporate Grants for Women:


Corporate grants for women are developed and administered by public companies who wish to fund projects that have a reasonable chance of producing benefits to the funding party. Corporate grants are typically provided to women for career or educational advancement. 

Professional Grants for Women:


Professional grants for women are typically offered by non-profit organizations and academic institutions within a given industry or occupational field to advance the status of individual workers and the field itself. A number of professional women’s organizations provide advancement grants or career development resources by members of the industry for counseling, education and travel. Popular professional grants for women are offered by the following foundations: the Barbara Lee Family Foundation, the Susan G. Komen Breast Cancer Foundation and the American Association of University Women. 
Federal Grants for Women (Non-Business Related):
The federal government offers thousands of grants that benefit women; however, you will not be given funding just for being a woman. Of the 900 federal grant programs, there are roughly 110 that are designed to help women with specific needs.

Short-Term Loans

Short-Term Loans

A short term loan is a form of financing that is attached with a quick repayment schedule—short-term loans may have a maturation period as short as 90 days. The fulfillment of the loan is dependent on the amount of financing; however, all short-term loans possess maturity dates that are significantly shorter than regular loans. 
The repayment schedule associated with the financing is the distinctive characteristic of short-term loans. Unlike regular loans, which commonly have repayment schedules of 30 years, a short-term loan must be repaid in a much shorter timespan (between 90 days and fifteen years) or immediately after the borrower achieves satisfies his initiative for securing the short-term loan. For example, when a business secures a loan to keep afloat while awaiting customer pay for a service, a lender would expect repayment as soon as the company receives pay from their clients or customers. In contrast, a short-term business loan delivered to a company for inventory shortfalls would be repaid as soon as the inventory is sold off. 
Benefits of Short-Term Loans:


Short-term loans are provided to businesses or individuals in need of quick financing—the funds are utilized to satisfy a payment, off-set a loss or to relieve a cash deficit problem. As a result, all initiatives tied to this loan schedule are used to alleviate shortcomings in the short-run; short-term loans are not used for long-term financing needs.  
The primary benefit of these loans is that they are immediately delivered, enabling the borrower to operate with increased liquidity. Moreover, because of their brief repayment schedules, short-term loans do not require serious commitment—the borrower is not indebted to the lender for a significant period of time.
Negatives Associated with Short-Term Loans:
Fast business loans are appropriate for both existing and new businesses. In regards to new businesses, banks or lending institutions will grant short-term business loans over regular loans because they are less risk—short-term loans provide less money at higher interest rates. Before short-term loans are granted, a lender will review the company’s cash-flow history and payment track record. Typically, short-term business loans are unsecured; they do not contain collateral and the bank relies solely on the borrower’s credit history and credit score.
The primary negative aspect associated with short-term loans is that this method of financing is more susceptible to default. This increased vulnerability results because of the loan’s conditions: short term loans have higher interest rates, shorter repayment dates and higher penalties if a default is realized. 

Information on How to Secure a Short-Term Loan:
Short-term business loans are dependent on your credit history and the repay capability of your business—these variables will affect the conditions (interest rate, repayment date and associated fees) attached to your short-term loan. 
Short-term business loans can stretch as far as 15 years; however, lenders are likely to giver shorter term loans to new or unproven businesses. Short-term loans are typically used to pay off the business’s emergency financial obligations.

Loan Modification

Loan Modification

Loan Modification and a Look at the Home Affordable Modification Program


A Loan Modification is the process of permanently changing one or more of the terms of a Mortgagor’s loan outside of the original contract terms. Having a loan modification usually allows a loan to be reinstated, and results in payments the mortgagor can afford to pay.
A loan modification can change many different terms of the contract:
·         Reducing the principal of the loan
·         Lengthening the term of the loan
·         Reducing late fees or penalties
·         Reducing the interest rate of the loan
·         Changing the interest rate to a fixed rate from a  floating rate
·         Adjusting the floating rate calculations
·         Temporary postponing of payments
In 2008, the Home Affordable Modification act was passed in order to assist eligible home owners with their home mortgage debt by setting up a loan modification program. The purpose of the program is to help the 7-8 million eligible homeowners that are at risk of foreclosure keep their homes. The program was created under the Financial Stability Act of 2009.
Under the new program, home owners can obtain a mortgage loan modification if:
·         Their loan began before January 2009.
·         They have an unpaid balance up to $729,750 (with higher limits for multi-family homes)
·         The total of the payments must exceed 31% of the gross monthly household income. These payments include principal, interest, homeowner’s insurance, and property taxes.
·         There is documentation and proof of income, a signed IRS 4506-T, and a signed affidavit of financial hardship.
·         Property owner must live in the home.
·         Lenders would receive incentives to provide loan modifications for at-risk borrowers who have not missed payments even when at imminent risk of default.
·         The borrower must be at most 5% underwater.
·         Loan modifications can only occur once and will only happen until the end of 2012.
If these requirements are met, the loan modification may occur in many different ways. The program can:
·         Share the reduction costs with the lender, potentially lowering the monthly payments down 31% debt to income ratio
·         Give servicers who provide loan modifications $1,000 for each modification along with incentives on still-performing loans of $1,000 annually.
·         Reduce the principal for homeowners that make payments on time up to $1,000 per year for up to five years.
·         Create one-time bonus incentive payments of $1,500 to lender as well as $500 to servicers for loan modifications made while a borrower is not behind on payments
·         Create incentives for getting rid of additional liens on loans modified under this program.

Credit Lines

Credit Lines

A Look at Different Types of Credit Lines


A credit line is a credit source given form a financial institution such as a bank to a business, government, or individual. Credit lines are usually divided into three different types: Installment credit, revolving credit, and open credit.
Installment credit
Installment credit lines use a predetermined amount of payment that is paid at a regular interval. The borrower often pays a set amount of principal as well as interest on a monthly basis. These payments are then divided up throughout a set number of years.
Installment credit lines are often used for:
• Car payments
• Mortgage loans
• Student loans

Revolving Credit


Revolving credit lines allow a individual to spend up to a predetermined limit. The acquired debt can then be repaid at the end of a billing cycle by making minimum payments, which pays off the debt over time.  The consumer is usually charged a certain amount in interest which is paid in addition to the principle after each billing cycle. The most common example of a revolving credit line 
Open Credit


Open credit lines do not have any limit on spending or a minimum payment. However, payments are still usually due and end of a billing cycle. 
Open credit lines are often used for:
• Utilities
• Gas station cards
• Cellular services
• Certain American express Cards
Business Credit
There are also business credit lines that are very similar to personal credit lines. The application process can vary since it can be made under a corporation’s business name or a LLC. These credit lines are not reported with the individual’s personal credit, allowing business credit and personal credit to be built separately. 
Applying for a Credit Line
There are many different factors involved when applying for a credit line. Many financial institutions look at an applicant’s creditworthiness through a credit score, as well as the applicant’s debt and his or her ability to make payments on it.
Financial institutions may also look at a credit history and the ability for an applicant to repay. The can depend on how much money or income the applicant has, how sustainable the individual job and lifestyle are, and how past debts have been managed.
When trying to obtain a business credit line, a lender will look at the profits and losses of a company the profitability, and business risk of the business. The lending institution also determines the credit limit based on the assets that can be used as collateral, such as the physical building or real estate.

Unsecured Personal Loans

Unsecured Personal Loans

Looking for Unsecured Personal Loans


Unsecured personal loans, also known as signature loans or personal loans are loans that are most often used by borrowers for small purchases like consolidating debt, home improvements, vacations, computers, or unexpected expenses. With unsecured person loans, the lender relies on the borrower’s promise to pay the loan back.
Unlike home equity loans or mortgages, unsecured person loans are not backed up by collateral such as property. This creates a larger risk for the lender to provide the loan. Because of this, interest rates for unsecured personal loans are more often higher than those of secured loans. Unsecured loans also tend to have less flexibility and are overall more expensive as well. The upside to an unsecured personal loan is that they are rather suitable for a short-term loan.
The typical qualities of unsecured personal loans include:
• No collateral to back up the loan
• The interest rates are usually higher than secured loans but lower than many credit card rates.
• Fixed terms in regards to the due date and the interest
• Some work as a revolving line of credit if the interest rate is variable.
• The interest on an unsecured personal loan is not tax deductible.
Unsecured personal loans can be risky because they can easily drain a bank account and result in default or block progress towards positive cash flow.  It is best to pay off unsecured personal loans as quick as possible to save money and prevent inflated charges, making it easier to create a budget that is easier to live with. Late payments or a lack of payment can adversely affect the individual’s credit score
While having unsecured personal loans may be risky, there are benefits to getting one. For example, if a potential borrower does not have much home equity, it may be the best choice to get a loan. Getting one with a fixed rate creates a structured schedule of payment unlike a credit card, where additional spending can increase debt.
Before committing to any unsecured personal loans, it is important to do research and shop around for a good loan. An unsecured loan is a large investment it is in the borrower’s best interest to find the best deal. 
Personal credit history plays a heavy role in approval for the loan as well as the terms and interest rates offered. Potential borrows with bad credit will often have less lender’s willing to finance them. If an individual gets denied by a lender, it can make bad credit even worse.
When deciding whether an unsecured personal loan is the right decision, it is important to consider just what the borrower wants out of the loan, and what the borrower can provide.

Loan Modification Programs

Loan Modification Programs

There are many different loan modification programs available in order to change the terms of a mortgagor’s loan outside of the original terms of the contract. Often, these loan modification programs try to change at least one of these terms:
• Reducing the principal of the loan
• Reducing late fees or penalties
• Lengthening the term of the loan
• Reducing the interest rate of the loan
• Adjusting the floating rate calculations
• Changing the interest rate to a fixed rate from a  floating rate
• Temporary postponing of payments
One of the loan modification programs available is the Homeowner Affordability & Stability Plan, which was set up under the Financial Stability Act of 2009. The purpose of the program is to help up to 8 million eligible homeowners that are at risk of foreclosure keep their homes. The program was created under the Financial Stability Act of 2009. In order to be eligible, a homeowner must meet these requirements:
• Their loan began before January 2009.
• They have an unpaid balance up to $729,750 (with higher limits for multi-family homes)
• The total of the payments must exceed 31% of the gross monthly household income. These payments include principal, interest, homeowner’s insurance, and property taxes.
• There is documentation and proof of income, a signed IRS 4506-T, and a signed affidavit of financial hardship.
• Property owner must live in the home.
• Lenders would receive incentives to provide loan modifications for at-risk borrowers who have not missed payments even when at imminent risk of default.
• The borrower must be at most 5% underwater.
• Loan modifications can only occur once and will only happen until the end of 2012.
With these loan modification programs, homeowners can help by:
• Share the reduction costs with the lender, potentially lowering the monthly payments down 31% debt to income ratio.
• Give servicers who provide loan modifications $1,000 for each modification along with incentives on still-performing loans of $1,000 annually.
• Reduce the principal for homeowners that make payments on time up to $1,000 per year for up to five years.
• Create one-time bonus incentive payments of $1,500 to lender as well as $500 to servicers for loan modifications made while a borrower is not behind on payments.
• Create incentives for getting rid of additional liens on loans modified under this program.
There are also second lien loan modification programs that use a lender who has participated in the Home Affordable Modification Program. These loan modification programs do not necessarily offer a permanent modification with good terms, but are required to offer one. The requirements for eligibility are the same as the government loan modification programs.

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