Student Loan Payoff Through A Home Equity Loan

As many college students go through the rigors and necessary steps to finish their educations, once they're done and successfully graduated, they know it's time to start their own, independent lives. With school out of the way, jobs on the horizon and a bright future ahead many will be seeking to purchase their own homes - if not right away, sometime down the line. Going with the assumption that students will in fact buy a home within a 5 year span of graduating, they're probably also looking to satisfy their student loan balances within that time frame. Here is where opportunity lies.

If such a situation exists for you, where student loans need to be paid and you now own a home, there is a way in which you can use your new home to pay off your student loans. How, you might ask? Well, it's simply a matter of using a home equity loan to pay off your student loans, and quite quickly too.

Shortening Student Loan Payoff Through A Home Equity Loan

It's no surprise that most students coming out of college feel that paying off their student loans will be a long haul. Yet, to your delight, as many other students', there is a quicker solution to rid your self of student debt �" through managing your debt responsibly and considering using a home equity loan. Considering here is mentioned merely because using a home equity loan to pay off your student loans is a two-sided financial action, having both ups and downs, defined pros and cons.

Take Into Mind Home Equity Loan Perks

When looked at and reviewed initially, it would seem that consolidating your student loans into a home equity loan would be a wise decision, one with little to think or worry about. This is so due to how home equity loans work. Since these types of loans essentially use your newly owned property as collateral, banks are able to offer much lower rates than the majority of what private student loans would. This is a saving grace, in more ways than one. Financially, you'll save literally thousands of dollars (via long-term interest payments), not to mention benefiting from added tax perks. And better still, in terms of lowering your total expenditures, home equity loans are tax-deductible.

But, Also, Consider The Pitfalls of Using A Home Equity Loan

It's clear that utilizing a home equity loan to pay off student loan debt is beneficial, yet it is still a bold and weighted move. Know that using a home equity loan isn't 100 percent without caution. Firstly, it's paramount to mention again that your house is used as collateral, which could be to your detriment, especially if rough times unexpectedly pop up, which could cause you to have to default on your mortgage. This could cause you to lose your home, which would be an awful thing to deal with.

And also, factor in that you will lose the deduction that comes with student loan interest, despite gaining a tax deduction for the paid interest on your home equity loan. The ideal thing to do here is to calculate, by crunching numbers, which loan option would best suit you in the long run. Make sure that you understand your options, as well as the ups and downs of home equity loan use to pay off your student loan balances.

by E.S. Cromwell

The 50 Year Mortgage-Pros and Cons

With the 40 year mortgage becoming increasingly common in states such as California, where high home prices make mortgages less affordable for the average home-buyer, the latest mortgage product has been rolled out-the 50 year mortgage.

During the 1980s, mortgage interest rates in America topped 18%, prompting the introduction of the 40 year mortgage. The 40 year mortgage increased in popularity again in 2005, when Fannie Mae introduced a program to offer these extended-term mortgages. In 2007, approximately five percent of all mortgages are 40 year mortgages, with that figure reaching 25% in high-cost housing markets such as on the West Coast. With the 40 year mortgage becoming a more main-stream product, the 50 year mortgage has been introduced. While this type of mortgage further reduces the monthly cost of loan repayments, there are some definite disadvantages involved.

The Pros

The main advantage of choosing a 50 year mortgage is a fairly obvious one-the extended terms of the mortgage make monthly repayments lower, and it means that owning a home becomes more affordable. There's not always a huge difference between the monthly repayment on a 40 year mortgage and on a 50 year mortgage, but those few dollars can mean the difference between affording your own home now and having to wait a few more years to save a larger down-payment.

One of the important things to note about the 50 year mortgage is that after the first five years, the interest rate is adjustable. That means after the fixed-rate period is over, your interest rate can increase and decrease along with current market rates. This is one of the aspects of the 50 year mortgage that keeps that initial interest rate so low. If you're looking for a low-cost mortgage with a view to refinancing within five years, the 50 year mortgage can be a good way of approaching this.

Finally, the 50 year mortgage is typically a safer way of affording a home if you're unable to afford a conventional 30 year fixed-rate mortgage. Options such as interest only loans or balloon mortgages offer initial lower payments, but these come with some very risky drawbacks. Unlike other low-initial-cost mortgage options such as the interest-only mortgage, there's no possibility that you'll end up with negative amortization with a 50 year mortgage. This makes it a much safer way of achieving a lower-cost mortgage.

The Cons

Of course, the 50 year mortgage has some drawbacks of its own. Tacking that extra ten years onto the terms of the loan means you add a big chunk of interest, making the total cost of the loan significantly higher. That 50 year long will reduce the amount you must pay each month, but over the life of the loan it's going to cost you. In addition, the interest rate on a 50 year mortgage is typically slightly higher than with a 30 year or even a 40 year mortgage. Longer terms mean increased risk for the lender, and you pay for that risk with extra percentage points on your interest rate. It may not be much-less than 1%-but even that adds several thousand dollars to your loan total.

Another disadvantage with the 50 year loan is a result of the way in which mortgage payments are structured. All conventional mortgages are front-loaded with interest, meaning that the first years of repayments are almost all interest, and you don't start paying off a significant amount of principle immediately. The longer the terms of the mortgage, the longer it takes to build up equity in your home-more than twice as long to build up just 20% equity in comparison to a 30 year mortgage.

A related problem with this very slow build-up of equity occurs in cases where your down-payment is less than 20% of the home's appraised value. In these cases your lender typically requires you pay for private mortgage insurance until you reach that 20% equity figure. With a 50 year mortgage, it'll take much longer to reach 20%, so you'll be paying extra for private mortgage insurance for much longer than with any other type of loan.

What does this mean for Home-Buyers?

For people who find that the 30 or 40 year mortgages aren't affordable, the 50 year mortgage can make the dream of home-ownership a reality, but these mortgages are best used with a view to refinancing as soon as possible. The 50 year mortgage shouldn't be considered a long-term loan, simply because those extended terms are so expensive in the long run. As long as you're planning to refinance within five to ten years, the 50 year mortgage is a good alternative to riskier low-cost products such as the interest-only mortgage.

by Stephanie Larkin

The Home Equity Loans Pros and Cons

Should you tap on home equity for much needed funds? Read on this loans pros and cons and learn out why and why not.

Usual case scenario: You are riddled with debt, credit card bills, tuition fees, household repairs. The only thing you eyeing is the home equity loan plans. Bungalow equity loans can be disastrous to the wrong hands, in your case a wrong series of decisions.

A bungalow equity loan is a good escape hatch indeed to a debt riddled situation but in a responsible hand. After all where can you find the biggest asset that can be liquidated to a loan readily than your house? Sounds terrifying yes, but proper payment and interest plan that coincides with a regular income or a major expected windfall around the corner like stocks can purely avert disaster.

So what are really the house equity loans pros and cons? The definite number of pros is equated evenly with its cons. But it is more favorable to be aware of all the cons before venturing what apartment equity loans can do for you.

The most dreadful circumstance is losing your homes. And losing your home this way is the most dreadful if not embarrassing. Your insurance won't be triggered this way and some apartment equity loan plans include all the furnishings on the time of the survey.

Facts about foreclosure are real. They happen. In fact high foreclosure rates happen on Georgia, Nevada and Colorado. One out of every 422 households is in primary stages of foreclosure in Georgia, 1,795 properties entering foreclosure in Nevada, 3,747 properties in Colorado. This is because of apartment equity plans gone awry. The most common culprit are Lost jobs.

It easy to spend for everything you need when you have money; or rather when an accessible means is readily available. It could happen in a fixed rate apartment equity plan, but most victims are line of credit type apartment equity plans. Why? When you have a ready check available, you tend to dispense it faster than you could count your receipts. The outcome is endless piles of bills, coupled with your mortgage, plus your house equity charges. So you draw more amounts from the house equity loan to offset your existing bills, digging yourself deeper into debt.

In the house equity loans pros and cons, I like to point out that the cons should be highlighted always. Learn about the cons before committing something as valuable as your property. If you have mastered the art of cautious spending, the house equity option will be your best friend yet.

by Joann Cheong

The Pros and Cons of Corporate Bank Loans

The first thing that comes into a prospective business owner's mind when sourcing for money to start up their business is to go to the bank. It's convenient, safe and regulated, why would you go anywhere else?

But people must keep in mind that for most things in life, there are its pros and cons. Before you jump on the corporate banking business loan bandwagon, take a while to consider your options and make an informed decision.

The Advantages

Convenience and multiple loan options - Besides a standard business loan, banks can provide a selection of loan choices for you to consider. Even non-commercial loans that are able to be used for business purposes including personal and home-equity. What's more is that there's probably a commercial bank no more than 10 minutes from your house.

The bank has little to no control over how you spend the money - If the bank reviews your business plan and approves the loan to you, the money is essentially yours to do with as you wish. Since you are already in agreement with the bank on the interest rate for them to earn from you, they have little to no say what you do with the money. If you decide to use it all to travel the world instead of starting a business, well that's your choice (although not a very good one).

This is a non profit sharing arrangement - Unlike business partners, venture capitalist funds or any other sources of capital, the bank is not entitled to any of your profits. Besides repayment of the loan plus interest, you do not need to split your profits between any other investors.

Interest rates may be low - The interest rates the bank can offer may be lower than other sources of financing such as credit cards and finance companies. Although not as low as borrowing from friends and family of course.

Commercial loans payments are often tax-deductible - You will need to check with your local tax department, but you may be able to get tax deductions related to the interest payments you are making on your business loan.

The Disadvantages

It may be hard to get a loan - Banks will probably require you to show them your business plan and convince them that your business has a chance of making a profit. If they don't believe in your product/ service they could easily refuse you the loan. This is to ensure that when they loan out money, they are sure to get it back. Also, standard business loans are often limited to pre-existing businesses that have a financial history of success.

Application for a loan can be lengthy - Bank loans may require more information and a longer review process compared to other types of sources.

Collateral is usually required - A commercial institute usually requires collateral on the business loan, although this would probably not be required from other types of lenders. This may be quite risky if the collateral that you have to put up is your house or other family possessions.

You may not get all you ask for - Unlike a housing loan, which barely needs any persuasion to qualify for, you may not be able to get 80-100% funding for your business. The return on housing loans is so much better for banks that for a business loan, unless it's quite small, you may only receive 75% of what you ask for. This varies from bank to bank.

So weigh your options before taking a corporate loan from a financial institution such as a bank, it may actually be better for you to find other sources of funding. Friends and family are always a good place to start. Just consider the pros and cons as laid out above and it will help you to come to an informed decision.

by William Lee

The pros and cons of home loan types

Standard Variable Home Loan is when the interest rate can vary throughout the term of the loan. It is most popular in Australia, if interest rates drop, repayments also drop. This product is flexible and often has more features.

Discount Variable, Honeymoon or Introductory Loans are variable rate loans with a discounted interest rate for a certain period of time, usually 1 year. There is less interest charged during the specified period and the repayments increase after the introductory period, since the interest rate reverts to the standard variable rate.

Fixed rate loans are loans where the borrower's interest rate and repayments are fixed for a set period, usually from 1 to 10 years, and sometimes longer. With this type of option borrowers have certainty of repayment amounts.

Combination and split loans allow borrowers to take part of their loan as a variable rate loan and the other part as a fixed rate loan.

Line of Credit/Equity loans provide access to funds, when required, up to the original limit set. Since it is secured by residential property, the interest rate is less than business loans, credit cards or personal loans. It requires discipline to ensure that over time the principle balance of the loans is reduced.

Low Documentation or No Documentation loans are products available for borrowers who are normally self employed or do not have tax returns or financial reports. Borrower completes a simple income declaration form. It generally carries a higher interest rate.

Specialist lenders offer Non-Conforming Loans to people who do not meet the bank's stricter lending criteria. It is a great way to rebuild a poor credit rating.

By No-Deposit Loan you can now borrow up to 106% of the purchase price of a property allowing you to also borrow the money to pay for extras such as stamp duty. You can buy property sooner without waiting until you save a larger deposit.

by Max

The Pros and Cons Of The Bad Credit Secured Loan

Until very recently, having bad credit prevented many people form being able to borrow money. But times have changed, and today there are lots of lenders willing to adjust their lending standards to include bad credit secured loans for those whose credit histories are less than stellar.

Your challenges are to first find one of them and to then decide if you want to risk some of your assets as security on a loan you may not be able to pay. Defaulting on the loan so will not only cost you your assets; it will decrease your already poor credit score.

Applying for a bad credit secured loan is not very much different from applying for any other sort of loan; while a bad credit secured loan takes your home equity or other assets into consideration as potential collateral, it also weighs down your poor credit history.

Even so, you may be able to find a lender who will grant you a bad credit secured loan no matter how poor your credit record or your present financial state. You will, of course, be assessed a higher interest rate on your bad credit secured loan than the rates offered to those with good credit histories, but if you offer your assets as collateral, you may qualify for a more favorable rate.

Understanding Collateral

Before you pledge your collateral, however, you should make sure you will be able to meet your payments, or your collateral will be forfeited, and if your house is the security for your bad credit secured loan, you could be in real trouble.

In simple terms, a bad credit secured loan will require you to pledge your property to the lender, who will be its rightful owner until you pay back what you borrow. If you cannot repay the loan, your lender is allowed to sell your property to cover the balance of your loan.

But repaying a bad credit secured loan is one way for you to reestablish your credit, and with a good credit rating you will have a much brighter financial future. Getting a bad credit secured loan will give you a new start, although the repayment period for such a loan can last between five and twenty-five years.

There are lots of lenders who deal exclusively in bad credit secured loans because of the enormous profit margins involved. They are assuming a very high risk by lending money to people who have proved to be poor money managers in the past, so they are somewhat justified in charging elevated interest rates.

by David Faulkner

The Pros And Cons Related With Home Equity Loans

The Pros of Home Equity Loans

1. The advantage with a home equity loan is the ability to use the loan amount any way you want, such as funding emergency, paying off debt, college, a vacation, or home renovation.

2. Interest rates for a home equity loan tend to be lower than credit card rates or consumer loans. Another advantage associated with home equity loan interest rates is that it is tax deductible up to the equity value in your home or up to $100,000 - whichever is less. (note - the tax-deductible portion is based on a percentage)

3. Home equity loans are also quite flexible, in the sense that it allows you to choose when to use the money, and you may be able to decide when to repay the principal.

The Cons of Home Equity Loans

1. You may risk losing your home with a home equity loan if you can't repay or refinance the loan, since your home is the collateral for the home equity loan, similar to an additional mortgage on your home. Foreclosure can happen within 60 to 90 days of late/missed payments.

2. For people experiencing career changes, home equity loan can also been an advantage, putting your home at risk. If the value of your home falls, it is probable that you might be left with more debt on your property than it's worth.

3. Home equity loan interest rate is dependent on the change in economy, causing your monthly payments to rise or fall. So, it's important to know the cap on the home equity loan's interest rate, which determines how high your interest rate can increase each year, or over the whole loan time period.

4. Home equity loan lenders can charge several types of fees such as application, origination, and withdrawal fees.

Things to remember when getting Home Equity loans:

1. Home equity loans are ideal for people who want to borrow a lump sum amount and reap long-term rewards.

2. Home equity lines of credit, on the other hand, are more suitable for those focusing on the short-term.

3. When considering home equity loans as means to consolidate debt, pan on the long-term effects.

4. Consider your financial situation before applying for any type of home equity loan, and weigh down all the pros and cons.

5. Compare interest rates, fees, repayment conditions, loan amount, and additional costs between several lenders.

6. Read all the fine print.

7. Do not accept offer for a credit card to access your credit line, which makes using your loan too easy.

8. Set up a systematic repayment schedule, and remember that it's best to pay more than the minimum required.

by Petra Amelia