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Best College Loan Advice: 9 Tips for Borrowing for College – CBS News #montel #williams #loans


#loans for college
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Best College Loan Advice: 9 Tips for Borrowing for College

  • Lynn O’Shaughnessy
  • MoneyWatch

Last Updated Apr 13, 2010 4:15 PM EDT

College loans . Yes, that time has arrived when parents of returning and new college students start thinking about applying for college loans. It’s also crunch time for graduating college students, who must begin repaying their college loans .

Unfortunately, many families get into trouble when they start shopping for college loans . When the college admission process is over, many parents are so relieved that they fail to do their homework before choosing college loans. College graduates also don’t give much thought to how they will tackle their college debt.

To help out families, who must borrow to pay the college, I’ve assembled some of my past college blog posts on student loans. Some of the posts will help you pick the best college loans and others will help those who must soon begin repaying their student loans.

There is no one right answer, but you will find links in this post to calculators that can help parents determine what level of college debt they can handle.

Students should limit their borrowing to federal loans only, which are safer and offer more protections than private student loans.

Federal loans are your best bet, but unfortunately many families gravitate to private loans because they don’t understand the difference.

In the early 1990s, only one out of every three college students took out college loans, but now well over half do.

There are federal student loan repayment opportunities that can dramatically shrink the monthly tab of eligible borrowers.

Don’t attend a college that has a high student loan default rate. Here’s how to find those default rates.

If you are struggling as you attempt to repay your student loans, here are some options.

Be extra careful about repaying student loans on time. The penalties can be astronomical.


Private college loans: 7 things you need to know – CBS News #interest #free #loans


#school loans
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Private college loans: 7 things you need to know

  • Lynn O’Shaughnessy
  • MoneyWatch

Mar 27, 2012 4:53 PM EDT

CD Close

iStockphoto

(MoneyWatch) If you have to borrow for college, the best college loans are the ones available through the federal government, which provide the same student loan rates and terms for everyone.

If you are interested in pursuing private college loans. you need to proceed carefully. Here are seven things you need to know when shopping for private loans.

1. Turn to credit unions.

Credit unions, which are newer players in the private student loan world, almost always provide better interest rates. Ironically most people stick with the well-known lenders even though their rates are typically higher. You can look for college loans at credit unions through cuStudentLoans .

2. Check for schools that have their own credit unions.

If your school is affiliated with a credit union, check its rates. Here are institutions that have a credit union:

Harvard University

University of Chicago

Amherst College

Hampshire College

Mount Holyoke College

University of Wyoming

MIT

University of Kentucky

Princeton University

California State University system

Eastern Iowa Community Colleges

Canada College

3. Apply for multiple loans.

At AllTuition. a private college loan comparison site, parents research many loans, but rarely apply for more than one. Unfortunately, borrowers won’t know what rate they qualify for unless they apply. It’s well worth the effort.

“A family taking out a $12,000 private loan is paying $5,000 more in interest because the parents aren’t taking 30 minutes to shop and they only complete one application,” says Sue Kim, Alltuition’s CEO.

4. Don’t assume you’ll get the lowest rate.

The teaser rate on private loans can look much more attractive than federal college loans. For instance, the interest rate for the federal PLUS Loan for Parents is 7.9 percent vs. some advertised rates of 3.5 percent or 4 percent. Mark Kantrowitz. the publisher of FinAid. however, estimates that fewer than 5 percent of borrowers capture the best rate.The difference between the lowest rate and the highest rate at an individual lender can be huge.

5. Use loan search engines.

Here are three online tools to find private student loans:

6. Ask the right questions.

Before committing to a private loan, ask these questions:

1. What is the interest rate?

2. Is the rate fixed or variable?

3. Is there an interest-rate cap?

4. What is the total cost of the loan?

5. Does the loan have borrower rewards?

6. What are the student loan deferment options both during and after school and are there any hardship waivers?

7. Are there any additional fees?

8. How difficult is it to consolidate loans and cut interest rates after graduation?

9. Does the loan offer penalty-free pre-payments?

10. How long is the grace period?

11. What are the borrowing limits?

7. Borrow responsibly.

Don’t borrow too much. Sure, college is a great investment, but you don’t want to hamstring yourself by graduating with too much debt. It’s much easier to borrow too much through private loans because they have higher borrowing limits.

Use the student loan calculator at Mapping Your Future to estimate how much your repayments will be.


6 things to know about the new student loan rates – CBS News #payday #loans #bad #credit


#student loans rates
#

6 things to know about the new student loan rates

  • Lynn O’Shaughnessy
  • MoneyWatch

Aug 9, 2013 3:41 PM EDT

(MoneyWatch) President Barack Obama is scheduled to sign a bill today affecting how much millions of college students and their parents will pay on college loans for years to come.

With the new law taking effect immediately, Here are six things that you need to know about the legislative changes before you apply for any federal college loans :

1. Interest rates on college loans are dropping. The interest rate for federal loans for undergraduates, grad students and parents are all shrinking. Anyone borrowing for the 2013-14 school year will pay less in interest than in recent years. The rate drop is retroactive to July 1, which is the date that always marks the start of the new federal financial aid year.

2. Undergraduates will enjoy the biggest price break. The interest rate on Stafford loans. the most popular kind of college financial aid, will drop from 6.8 percent to 3.4 percent. That means millions of students who borrow through the program for the coming school year will pay a fixed rate of 3.4 percent for the life of the loan.

Stafford loans for grad students will decline from 6.8 percent to 5.4 percent, and PLUS loans for grads and parents will decline to 6.4 percent, from 7.9 percent.

3. Federal loans are now tied to the market. The interest rate for each new crop of federal loans can change from year to year under the new law. These loans will now be linked to the financial markets, specifically to the 10-year U.S. Treasury. Rates for the loans will always be higher than the 10-year Treasury because Congress added an interest-rate cushion to each of them.

Here are the interest rate cushions for the three federal loans: undergraduate Stafford (2.05 percentage points above the base rate); graduate Stafford Loan (3.6 percentage points); and PLUS Loan (4.6 percentage point).

4. Federal loans have an interest rate cap. To prevent student loan rates from soaring during times of high inflation, the legislation imposed the following interest rate caps, which consumer groups and other critics have complained are too high:

Stafford Loan (undergraduates): 8.25 percent cap

Stafford Loan (grad students): 9.25 percent

PLUS Loan (grad students and parents): 10.5 percent

5. Student loan rates could climb in the future. Critics contend that the college loan rate reductions amount to teasers that will disappear if rates climb. According to projections by the Institute for College Access Success. an advocacy group, the Stafford loan rate for undergrads is likely to exceed its old fixed rate of 6.8 percent by 2017. PLUS loans are expected to top their old rate of 7.9 percent in three years, and Stafford loan graduate borrowers could be worse off in two years.

6. The U.S. government will continue to reap a windfall. The federal government makes a huge profit on providing college assistance. The Congressional Budget Office estimates that the government will generate $184 billion in profits from its college loan programs over the next decade. For 2013 the CBO has projected that the U.S. will make a record $50 billion off federal student loans.


Citigroup Shedding Student Loan Business – CBS News #interest #only #loan #calculator


#citi student loans
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Citigroup Shedding Student Loan Business

  • CBSNews
  • AP

Sep 17, 2010 12:54 PM EDT

Citigroup logo Close

AP

Citigroup Inc. is exiting the private student loan business, as the government changes the playing field by making Uncle Sam the primary lender to students.

The government’s growing role is cutting out private lenders from much of the business of financing higher education, prompting lenders to decide whether to exit the business entirely or scale back.

On Friday, Citigroup said it is selling its 80 percent stake in Student Loan Corp. its student loan business, and about $32 billion in related assets to Discover Financial Services and the student lender Sallie Mae.

The combined transactions will bring Citigroup $1.8 billion in cash, but Citi said it will take a loss of about $500 million in this year’s third quarter because of the deals.

The move is the latest by Citi to shed some of its smaller businesses and focus on its core consumer banking operations, as it tries to recover from the recession and credit crisis.

“This is a byproduct of the government basically nationalizing the student loan business,” said analyst Matt Snowling of FBR Capital Markets.

Back in March, President Obama signed a law to make the government the primary lender to students, rather than a guarantor backing private loans. This essentially means that private lenders can continue to service their exisiting loans, but the potential for growth in making new loans is cut off. Private lenders still can make student loans that are not backed by the government, although that market is shrinking.

The changes have hit Citi’s student loan business and Sallie Mae harder than the industry as a whole, said Tim Ranzetta, founder of the independent research firm Student Lending Analytics. He estimates industrywide the number of new private loans was down 24 percent in the 2009-2010 academic year compared with the previous year, while Citi and Sallie Mae have seen their new loan business cut by roughly half.

“There is a reordering of the industry going on,” Ranzetta said, noting that Discover Financial and Wells Fargo Co. are gaining market share.

In Friday’s transactions, Sallie Mae, the largest student lender, and Discover Financial, provider of the Discover payment cards, will fill the void from Citi’s private student loan exit.

Discover has agreed to pay Citi $600 million, or $30 per share, for Student Loan Corp. Discover also will acquire $4.2 billion of private student loans from Student Loan Corp.

By expanding its student loan business, the deal gives Discover the opportunity to drum up more credit-card business. It will be able to introduce the Discover brand to a new pool of clients.

Sallie Mae, based in Reston, Va. is the nation’s largest student lender, formally known as SLM Corp. It has been restructuring, including slashing jobs, as it responds to the new law and increasingly emphasizes its servicing business for federal loans. With the Citigroup deal, Sallie Mae will acquire $28 billion in federal loans, adding another 1.3 million new customers, for $1.2 billion.

After the transaction, Sallie Mae will manage or service about $200 billion in federal student loans.

Citi has been looking for a buyer for its 80 percent stake in the Student Loan Corp. for several months as it refocuses it operations. The indirect Citi subsidiary is 20 percent owned by holders of Student Loan Corp.’s publicly traded shares.

Citi has been unraveling the one-stop financial services marketplace model it created in the late 1990s. Citi split itself into two parts last year Citicorp and Citi Holdings. The latter division holds riskier assets including the mortgage-backed securities that undermined the bank and other financial institutions.

In afternoon trading, Student Loan Corp. shares surged $8.72, or 41 percent, to close at $29.87 slightly below the $30 price per share that Discover is paying in the transaction.

2010 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.


N. C. cuts unemployment benefits to pay back federal loan – CBS News #loan #bad #credit


#unemployment loans
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N.C. cuts unemployment benefits to pay back federal loan

  • Jim Axelrod
  • CBS News

Jul 9, 2013 7:51 PM EDT

(CBS News) GOLDSBORO, N.C. — These days, Shaun Marso’s life is pretty simple. He’s either at the gym or in front of his computer looking for a job. Simple, but not easy.

Right now, he has $170 in his bank account.

Shaun Marso lost his job selling insurance six months ago. Last week, he got his final unemployment check. Close

CBS News

“And I believe 93 cents in savings,” Marso says. “That’s all I have to my name.”

Marso lost his job selling insurance six months ago. Last week, he got his final unemployment check.

“July 1 — that was the cutoff date,” Marso says. “Yup. That’s D-Day. No more.”

North Carolina has the nation’s fifth-highest unemployment rate: 8.8 percent. When the recession hit, the state did not have enough money to cover all its unemployment claims, so it borrowed $2.5 billion from the federal government to cover the shortfall.

“And it was a loan with interest, and what I’m doing is I’m tearing up the credit card and we are going to pay off our debt like every reasonable family has to do,” says North Carolina Gov. Pat McCrory.

McCrory says paying it off as soon as possible would reduce taxes employers now pay to cover the loan — $21 per worker per year.

“We are going to try and free up money so businesses can hire people and get them off unemployment,” McCrory says. “This is not an easy decision.”

To get the money to pay off the loan earlier, the Republican governor and Republican legislature cut current state benefits from $535 a week to $350. The benefits end at a maximum of 20 weeks, instead of the current 26.

Watch: Job seeker: “I hate” taking unemployment, below.

Play Video

Job seeker: “I hate” taking unemployment

But changing the structure of state unemployment insurance made North Carolina ineligible for federal benefits that kick in after state benefits run out. So 70,000 unemployed workers in North Carolina are now out of luck.

For those who say, “I know it’s a tough economy, but get out there and look for a job,” Marso says, “Every day, you know, looking is not the problem. I can find jobs, it’s getting hired that I can’t get done.”

“I care for these people, and I want to help these people, and one way I help them is to not to continue policies that will create more people on unemployment rolls,” McCrory says.

The law means up to $600 million in federal money is no longer being pumped in to North Carolina’s economy. As for Marso, he might head elsewhere to find work — if he can find a way to fill up his gas tank to leave.

2013 CBS Interactive Inc. All Rights Reserved.


How to shop for a home loan – CBS News #paycheck #loans


#loan shop
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How to shop for a home loan

Prospective homebuyers spend plenty of time looking for just the right house, but nearly half fail to shop for a mortgage. That mistake could cost the typical consumer thousands — even tens of thousands — of dollars over time.

A recent survey by the Consumer Financial Protection Bureau found that three out of four consumers apply for a loan with only a single lender, rather than applying with multiple lenders to see which one might offer the best deal. Nearly as many said their main source of information about home loans was the mortgage lender or broker, which obviously has a financial interest in selling you a loan.

Meanwhile, interest rates and fees can vary dramatically from one lender to the next. And even seemingly small differences can add up to thousands of dollars over time. Consider a homeowner who takes out a $350,000 loan. If he secures a 30-year mortgage at 3.75 percent interest instead of 4.25 percent, he’ll pay roughly $100 less per month, or $36,000 less over the life of the loan.

Play Video

60 Minutes – Business

Mortgages: Walking Away

It’s estimated that one million Americans walked away from homes “underwater” or worth less than their mortgages even though they could afford th.

“Consumers spend considerable time looking at different neighborhoods and at different homes for sale. The same should be true when choosing among possible mortgage loans,” said Richard Cordray, director of the CFPB in a statement. “You are literally betting the house on the choices you are making, and it can be highly beneficial to shop around.”

So what do you need to be aware of to get the best deal on a mortgage?

Know your score: Your credit score determines whether you get the best loan rate, and even whether you can borrow at all. According to the CFPB’s new “Owing a home” calculator, a borrower with a credit score of 650 would find relatively few lenders vying for his business and most would lend at a 4.5 percent rate. If this same borrower had a credit score of 750, he or she would be able to borrow at a 3.625 percent rate in today’s market. This difference in rates amounts to about $50 per month per $100,000 borrowed. Thus the monthly mortgage on a $100,000 loan would be $456 for the borrower with great credit and $507 for the borrower with marginal credit.

Consumers can check their credit score for free at CreditKarma. If your score isn’t high enough to qualify for a favorable rate, you might want to examine what’s pulling your score down and address those issues before attempting to buy a home.

Decide on terms: One of the main reasons mortgage shopping seems complex is that there are dozens of different types, including fixed, adjustable and hybrid loans. The right type of mortgage will depend on how long you’re likely to own the home and what you can afford.

The most common products are 30-year fixed-rate loans, 15-year fixed-rate loans and so-called 5/1 adjustable-rate loans.

Adjustable loans are the lowest cost, starting at 2.625 percent in today’s market, according to BankRate.com. That would amount to a $803 monthly payment for someone taking out a $200,000 loan. The potential problem with this type of loan is that both the interest rate and the payment can rise after the fifth year — and every year after that — until it hits the lifetime cap, which is usually 5 or 6 percentage points above the initial rate.

In this case, that means the loan rate could go as high as 8.625 percent, which would nearly double the monthly payment. However, for those likely to stay in the home for five years or less, this loan is likely to be the lowest cost.

Play Video

Saturday

Adjustable rate mortgages make a comeback

Adjustable rate mortgages, popular during the housing boom, have been widely blamed for contributing to the country s financial crisis in 2008. M.

Planning to keep your house a lot longer? Then a 15-year or 30-year fixed rate mortgage may be a better option. Rates on 30-year loans are higher — about 3.9 percent today versus 3.1 percent for a 15-year loan. But because the 15-year mortgage must be paid off much faster, the monthly payment is higher — $1,381 per month on a $200,000 15-year loan compared with $940 per month on the 30-year mortgage. If you can afford the higher monthly payment, the 15-year loan is the best deal. But if making the higher payment is likely to be a struggle, and you don’t want to gamble with the roof over your head, stick with the 30-year, fixed-rate loan.

Watch the “points:” One way to secure a more attractive loan rate is to pay “points.” These are upfront fees that are calculated as a percentage of your loan amount. A lender may offer to give you, say, a 4 percent rate rather than a 4.2 percent rate if you pay 1 percent of the loan amount in up-front points. It’s not a bad deal to pay points if you’re planning to be in the home for a long stretch and like the idea of buying down the rate. However, not all lenders charge points. So to make sure you’re making apples-to-apples comparisons, look to see whether each loan includes points and insist that every lender provide a “no-point” rate and a rate with an equal number of points.

Beware fees: Lenders also vary greatly in how much they charge in fees. Some rate-shopping sites, such as Bankrate.com. will include fee estimates in rate comparisons. And all lenders must provide a “good faith estimate” of their final fees and charges when you start the loan process. Since these fees and charges can also add to thousands of dollars, be sure to compare the estimates — and ask about anything that seems amiss — before you sign for a loan.

Start shopping: There are many ways to hunt of for a mortgage. You can hire a mortgage broker to shop for you, use a rate-shopping site or simply start calling lenders. Or, ideally, do all three. Make a grid that allows you to keep track of the different rates and make sure you’re comparing all the financial details — rates, terms and fees.

If you have a preferred lender or a broker you’d like to work with, also keep in mind that loan rates and fees can be negotiable. If you’ve been offered a great rate, but prefer a different lender, go to your preferred lender and see if they can match the lowest rate and best terms. If you’ve got a great credit score or a good relationship with that lender, there’s a decent chance that the lender will bend the terms of the deal to accommodate you.

For a primer on buying a home and getting the right financing, check out this CFPB’s “Owning a Home” guide .

2015 CBS Interactive Inc. All Rights Reserved.


A new way to shrink private student debt – CBS News #bad #credit #unsecured #loan


#private school loans
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A new way to shrink private student debt

(MoneyWatch) Are you overwhelmed by private student debt. With $165 billion dollars worth of private student loans outstanding, there is a whole lot of suffering out there among former students struggling with their loans.

While it’s possible to consolidate federal college debt. consolidating private college debt has been just about impossible. Private lenders have never been motivated to offer their customers loan consolidation at lower rates when they could keep them locked in at higher ones.

But that reality has changed now that credit unions have moved into the market. They are now offering borrowers a way to consolidate their private loans at rates as low as 4.75 percent. With the average age of credit union members at 50, one powerful motivator of the non-profit credit unions is to attract younger customers, according to Ken O’Connor. the director of student advocacy at cuStudentLoans.org.

Credit unions are offering private college consolidation loans at variable rates of 4.75 percent, 5.75 percent and 7.25 percent. The interest rate you obtain will depend on the underwriting process, which looks at such things as your college grades, where you attended school, whether you graduated, your current job and your credit history.

Some borrowers will be able to shave hundreds of dollars off their monthly obligations by merging their loans. Here’s an example:

Let’s assume that a borrower is coping with $50,000 worth of private loans that have an average interest rate of 12 percent. With a 15-year loan, the borrower would ultimately pay more than $108,000 and the monthly payments would be $600.

Consolidating that debt into a loan with an interest rate of 4.75 percent would drop the monthly payments to $389 and the borrower’s total tab would be $70,000.

If you’re interested in consolidating private student debt, you are more likely to receive a lower rate if you have a cosigner. This will often be mom or dad. What’s attractive about the credit union loans is that they will allow the cosigner to walk away from this loan obligation if the borrower has made timely payments for 12 consecutive months.

You can learn more about consolidating private student loans at credit unions through cuStudentLoans.org.

And if you’re shopping for regular private student loans, you’ll want to read this post first: Private college loans: 7 things you need to know.

2012 CBS Interactive Inc. All Rights Reserved.


How to shop for a home loan – CBS News #small #business #funding


#loan shop
#

How to shop for a home loan

Prospective homebuyers spend plenty of time looking for just the right house, but nearly half fail to shop for a mortgage. That mistake could cost the typical consumer thousands — even tens of thousands — of dollars over time.

A recent survey by the Consumer Financial Protection Bureau found that three out of four consumers apply for a loan with only a single lender, rather than applying with multiple lenders to see which one might offer the best deal. Nearly as many said their main source of information about home loans was the mortgage lender or broker, which obviously has a financial interest in selling you a loan.

Meanwhile, interest rates and fees can vary dramatically from one lender to the next. And even seemingly small differences can add up to thousands of dollars over time. Consider a homeowner who takes out a $350,000 loan. If he secures a 30-year mortgage at 3.75 percent interest instead of 4.25 percent, he’ll pay roughly $100 less per month, or $36,000 less over the life of the loan.

Play Video

60 Minutes – Business

Mortgages: Walking Away

It’s estimated that one million Americans walked away from homes “underwater” or worth less than their mortgages even though they could afford th.

“Consumers spend considerable time looking at different neighborhoods and at different homes for sale. The same should be true when choosing among possible mortgage loans,” said Richard Cordray, director of the CFPB in a statement. “You are literally betting the house on the choices you are making, and it can be highly beneficial to shop around.”

So what do you need to be aware of to get the best deal on a mortgage?

Know your score: Your credit score determines whether you get the best loan rate, and even whether you can borrow at all. According to the CFPB’s new “Owing a home” calculator, a borrower with a credit score of 650 would find relatively few lenders vying for his business and most would lend at a 4.5 percent rate. If this same borrower had a credit score of 750, he or she would be able to borrow at a 3.625 percent rate in today’s market. This difference in rates amounts to about $50 per month per $100,000 borrowed. Thus the monthly mortgage on a $100,000 loan would be $456 for the borrower with great credit and $507 for the borrower with marginal credit.

Consumers can check their credit score for free at CreditKarma. If your score isn’t high enough to qualify for a favorable rate, you might want to examine what’s pulling your score down and address those issues before attempting to buy a home.

Decide on terms: One of the main reasons mortgage shopping seems complex is that there are dozens of different types, including fixed, adjustable and hybrid loans. The right type of mortgage will depend on how long you’re likely to own the home and what you can afford.

The most common products are 30-year fixed-rate loans, 15-year fixed-rate loans and so-called 5/1 adjustable-rate loans.

Adjustable loans are the lowest cost, starting at 2.625 percent in today’s market, according to BankRate.com. That would amount to a $803 monthly payment for someone taking out a $200,000 loan. The potential problem with this type of loan is that both the interest rate and the payment can rise after the fifth year — and every year after that — until it hits the lifetime cap, which is usually 5 or 6 percentage points above the initial rate.

In this case, that means the loan rate could go as high as 8.625 percent, which would nearly double the monthly payment. However, for those likely to stay in the home for five years or less, this loan is likely to be the lowest cost.

Play Video

Saturday

Adjustable rate mortgages make a comeback

Adjustable rate mortgages, popular during the housing boom, have been widely blamed for contributing to the country s financial crisis in 2008. M.

Planning to keep your house a lot longer? Then a 15-year or 30-year fixed rate mortgage may be a better option. Rates on 30-year loans are higher — about 3.9 percent today versus 3.1 percent for a 15-year loan. But because the 15-year mortgage must be paid off much faster, the monthly payment is higher — $1,381 per month on a $200,000 15-year loan compared with $940 per month on the 30-year mortgage. If you can afford the higher monthly payment, the 15-year loan is the best deal. But if making the higher payment is likely to be a struggle, and you don’t want to gamble with the roof over your head, stick with the 30-year, fixed-rate loan.

Watch the “points:” One way to secure a more attractive loan rate is to pay “points.” These are upfront fees that are calculated as a percentage of your loan amount. A lender may offer to give you, say, a 4 percent rate rather than a 4.2 percent rate if you pay 1 percent of the loan amount in up-front points. It’s not a bad deal to pay points if you’re planning to be in the home for a long stretch and like the idea of buying down the rate. However, not all lenders charge points. So to make sure you’re making apples-to-apples comparisons, look to see whether each loan includes points and insist that every lender provide a “no-point” rate and a rate with an equal number of points.

Beware fees: Lenders also vary greatly in how much they charge in fees. Some rate-shopping sites, such as Bankrate.com. will include fee estimates in rate comparisons. And all lenders must provide a “good faith estimate” of their final fees and charges when you start the loan process. Since these fees and charges can also add to thousands of dollars, be sure to compare the estimates — and ask about anything that seems amiss — before you sign for a loan.

Start shopping: There are many ways to hunt of for a mortgage. You can hire a mortgage broker to shop for you, use a rate-shopping site or simply start calling lenders. Or, ideally, do all three. Make a grid that allows you to keep track of the different rates and make sure you’re comparing all the financial details — rates, terms and fees.

If you have a preferred lender or a broker you’d like to work with, also keep in mind that loan rates and fees can be negotiable. If you’ve been offered a great rate, but prefer a different lender, go to your preferred lender and see if they can match the lowest rate and best terms. If you’ve got a great credit score or a good relationship with that lender, there’s a decent chance that the lender will bend the terms of the deal to accommodate you.

For a primer on buying a home and getting the right financing, check out this CFPB’s “Owning a Home” guide .

2015 CBS Interactive Inc. All Rights Reserved.


Student Loans: The Best Places to Borrow – CBS News #bad #credit #unsecured #loan


#best loan
#

Student Loans: The Best Places to Borrow

Last Updated Aug 3, 2010 8:39 AM EDT

Don’t get taken when you sign for a college loan. Federal loans are cheaper than ever this year, for both parents and students. But loans directly from banks or other for-profit lenders can trip you up. You might lock yourself into thousands of dollars of unnecessary spending and, potentially, a greater risk of default. Here’s where to borrow, with the best options first:

Federal student loans. They now go directly though the colleges, not through banks. For undergraduates who qualify for a federal subsidy, the fixed rate on new Stafford loans dropped to 4.5 percent for 2010-2011, down from 5.6 percent last year. The government pays the interest while you’re in school and for the following six months. Unsubsidized Staffords cost 6.8 percent. Both programs charge a 1 percent fee.

Whether you qualify for government aid depends on your income and assets, as reported on the FAFSA — the federal Free Application for Federal Student Aid. In general, the subsidy goes to families earning up to about $80,000 a year. If the loan amounts aren’t enough to cover your costs, look first to programs offered by the states.

State programs. Seventeen states lend money to students who live or will attend college there. Fixed rates range from 6 to 8.19 percent. Variable rates generally range from 1.78 to 3.8 percent, with Iowa and Maine as expensive outliers. Fees run from zero to 5 percent, with Iowa and New York spiking higher.

Go for Stafford loans first. The interest rates are fixed and you get the best repayment terms. States often require co-signers. The variable loans might have no caps, so you don’t know what you’ll be paying five or 10 years from now. In some states, repayments start while you’re still in school. Nevertheless, state programs offer better terms than you’ll get from banks.

PLUS loans. If parents can help, the right choice is a federal PLUS loan. You pay a fixed 7.9 percent (last year, some parents paid 8.5 percent), plus a 4 percent fee.

Parents can borrow the entire remaining cost of higher education, provided that they can pass a credit check. That’s gotten harder since the recession began. You’re disqualified if, among other things, you’ve gone through foreclosure or bankruptcy within the past five years or are more than 90 days late on repaying any debt. A parent can rescue the loan, however, by finding a co-signer.

Loans from private lenders. If you’ve run through all the government possibilities, and are still short of cash, look at the loans offered by private lending institutions. You might think that they all cost about the same but that’s not true. Rates vary widely. You can save yourself tens of thousands of dollars by investing a couple of hours in comparison shopping.

Tim Ranzetta can prove it. He’s the president of Student Loan Analytics, which rates 14 private lenders based on their program’s average cost. Last May, he applied online to six lenders as a co-signer on a nephew’s loans. He calls his credit score “average.” The offers came in at interest rates ranging from 6 percent, at a credit union, to 12.25 percent (plus a 3 percent fee) at Sallie Mae. (Rates on some loans have dropped since May.)

Tim’s brother, who has a high credit score, applied as a co-signer, too. The offers he got ranged from 4.25 percent at SunTrust and Discover to 10.125 percent (plus a 3 percent fee) at Citibank. In both cases, loans from the biggest brand names would have cost the family the most.

The only way to discover the lowest available rate is to apply to several lenders at once. Multiple applications won’t hurt your credit report. They’ll count as a single inquiry as long as you make them all within 30 days.

Private lenders are searching for ways to make their education loans more appealing. For example, Wells Fargo is offering a new loan not only to parents but to other sponsors, such as grandparents. It has no origination fee. Variable rates range from 4.25 percent to 10.74 percent, depending on your credit standing. Parents with top credit will pay less, at the start, than they would for a PLUS. On the other hand, they could pay much more if interest rates rise over the 10- to 15-year repayment period. The PLUS program also offers better choices to borrowers who become financially pinched and need to stretch the payments out.

Some schools provide short lists of preferred private lenders who supposedly provide the best deals. Compare prices anyway. The lists don’t necessarily cover lenders with the lowest costs.

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Payday Lenders Or Loan Sharks? CBS News #payday #loan #lenders


#payday lenders
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Payday Lenders Or Loan Sharks?

  • Jaime Holguin
  • CBS

Oct 8, 2004 4:34 PM EDT

Petty Officer Chris McClintic is smart enough to teach lessons about the Navy’s big guns, but as CBS News Correspondent Sharyl Attkisson reports, that didn’t keep him from ruining his personal finances using so-called payday lenders.

Payday lenders offer tempting short-term loans for a fee, due on payday. What McClintic and a growing number of military borrowers don’t foresee is how fast those loans and fees add up.

“It seems like it should be simple, but once you take out the $500 loan, you need $575 extra in a payday to pay it off,” McClintic says. “Nobody has that.”

So what ends up happening is, “You kept taking out the loan and repaying it.”

McClintic and his wife ended up owing fees amounting to 390 percent at an annual rate on five separate payday loans due at once.

Today, he’s trying to navigate his way out of debt.

“I called them and I said, ‘Look, there is no way I can pay all these loans this payday,” says McClintic.

Virginia’s “Hampton Roads’ area is a magnet for payday lenders. The world’s largest naval base offers up an endless supply of young sailors with tight budgets and steady paychecks.

But payday lenders reject critics claims that they’re “legal loansharks”. They insist they help people on active duty stretch their paychecks in a pinch.

Lyndsey Medsker, spokeswoman of Community of Financial Services Association, says payday lenders provide a service to the people who find themselves in financial need.

“At the end of the day it’s their choice,” she says. “They weigh their options. It can be a bounced check, a reconnected utility fee, whatever it may be, they look at their options and they are making the choice.”

Payday lenders may find easy targets among young troops, and the top brass worries debt could be distracting or turn them into security risks who could be compromised by terrorists or spies.

“It’s the ability of that young man or woman to resist all those temptations,” says Navy Adm. Steve Turcotte. “The ability of that young man or woman to fully focus and work on his job.”

The Navy is pushing for stricter laws governing payday lenders and offers financial counseling and other relief for sailors like McClintic.

McClintic is confident he’ll get out of debt, though he says, “In time. It may take a while.”

He blames himself, not the payday lenders, but admits he never would have gotten all those loans if it hadn’t been so easy.

Copyright 2004 CBS. All rights reserved.