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What is a Reverse Mortgage? Understanding the pros and cons of HECM! * Video

What is a Reverse Mortgage?  Understanding the pros and cons of HECM, NEF2.COM


#What #is #a #Reverse #Mortgage? # #Understanding #the #pros #and #cons #of #HECM

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What is a Reverse Mortgage? Understanding the pros and cons of HECM


What is a Reverse Mortgage?  Understanding the pros and cons of HECM, REMMONT.COM


What is a Reverse Mortgage? Understanding the pros and cons of HECM

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#What #is #a #Reverse #Mortgage? # #Understanding #the #pros #and #cons #of #HECM

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The TSP Loan Guide, Part 2: Pros and Cons of TSP Loans – TSP Allocation Guide #auto #title #loan


#tsp loan
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The TSP Loan Guide, Part 2: Pros and Cons of TSP Loans

What are the advantages of Thrift Savings Plan loans?

(1) The interest rate is very low and you are paying it to yourself instead of to a bank. So the loan is essentially free to you, other than a small administrative charge.

(2) You avoid the 10 percent penalty on early withdrawals from retirement accounts. If you aren’t old enough, or are old enough but haven’t separated from federal service, you would have to pay this penalty if you withdrew the money outright.

(3) The fee charged for TSP loans is a very low, flat fee of $50.

(4) The TSP loan application is quick, easy and straightforward. No one is turned down for a loan assuming sufficient employee contributions and earnings. No credit check is required. Other types of loans require a more complex application process, a credit check and more fees.

(5) There is no negative impact on your credit score. A TSP loan does not appear on your credit report, because it is not really a loan (you are using your own savings). If a TSP loan borrower loses his or her job, retires or leaves federal service and is unable to pay off the loan balance, the unpaid balance will be classified as a distribution for which income taxes must be paid, but it will not show up on your credit report as a default.

What are the disadvantages of TSP loans?

(1) The most significant disadvantage is missed opportunity. The most powerful feature of a retirement plan like the TSP is the tax-deferred growth and compounding of earning. Removing funds from your TSP account can significantly affect its growth. The inevitable result will be a smaller TSP balance at retirement, which will impact the way that you live out your golden years.

For example, lets say you took out a $50,000 residential property TSP home loan at the current interest rate of 2.125% and paid it off over 15 years. At the end of those 15 years you would have paid back $58,500 (and earned an additional $950 in interest on the principal after you paid it back). Your nest egg would have grown by only about $9500 in 15 years, and nearly all of that money came out of your pocket. Compare that to $50,000 compounding at 10.6% (the stock market s average rate of return over the past 25 years). At the end of 15 years you would have $243,481.

(2) Potential tax penalty. If you fail to pay off a TSP loan, income taxes on the distribution will be due. An additional IRS early withdrawal penalty of 10 percent will be applied if the account owner is younger than age 59.5 at the time of the loan default.

(3) A TSP loan of either type is not a mortgage. Therefore, the TSP loan interest payments are not tax deductible, as they might be for a mortgage or home equity loan.

(4) If you leave Federal service, you must pay off the loan within 90 days of the date when your agency reports your separation to the TSP. Any unpaid balance will be reported as a taxable distribution

The Double Tax Myth of TSP Loans

In the Disadvantages section of most websites which address TSP loans, the authors usually blindly copy some original source which incorrectly stated that taking a TSP loan results in paying taxes twice because the TSP account holder is moving tax-deferred assets into the taxable realm and after-tax income must be used to repay the loan. Suze Orman popularized the notion while discussing 401K accounts (which have the same tax treatment as the TSP) and this myth is widely spread across the internet.

Let’s say you want to borrow $10,000 from your Thrift Savings Plan account for a year. The TSP G Fund interest rate at that time is 5%, which you must pay back to yourself. That $10,000 was a pre-tax contribution, so you never paid income taxes on it. You take it all out, leaving yourself with $10,000 in cash. You haven’t paid any taxes on that $10,000. You leave it under your mattress, and a year later pay back the same $10,000 plus $500 in interest. You still haven’t paid taxes on the $10,000. When you eventually withdraw the money, then you finally must pay taxes. So what was the only thing taxed twice? The part attributable to the $500. Not the $10,000.

Now, does it matter if during the year your brother took the original 10,000 and then later replaced it under your mattress with a different $10,000? The answer is no. As long as you pay back the $10,000, that is all that matters.

The only part that is taxed twice is the interest. And since you are paying yourself the interest, this small double-tax is really the only cost of doing this loan. Using the example above and assuming a 25% marginal tax bracket, that means you only got taxed an extra $125 on that $10,000 loan. This is the same as getting a regular loan with a 1.25% interest rate.



Pros and Cons of Refinancing a Car Loan #payday #loan #no #credit #check


#refinance car loan
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Pros and Cons of Refinancing a Car Loan

By Emily Delbridge. Car Insurance and Loans Expert

Emily Sue Delbridge has a strong family history in the insurance industry. She has been in the insurance business since 2005 with her primary focus on personal lines insurance. Read more

Refinancing a car loan can seem appealing at times. It is important to take a close look to make sure you will benefit from refinancing. Refinancing has both pros and cons depending on your situation. Making educated decisions about your finances will keep you on the right track to financial well being.

Pros of Refinancing a Car Loan

  • Get more money out: If you currently owe less than what your vehicle is worth, you may be able to access more money by refinancing. For instance, you have owned your vehicle for three years. Your vehicle is currently worth $8000 and you owe $5000. You need money for a small home improvement. One option would be to refinance your vehicle for $6500. You will still owe less than what the vehicle is worth and have $1500 after the new loan pays off your previous $5000 balance. The $1500 can now be used for your home improvement.
  • Lower your payments by extending the loan: Sometimes a life changing event such as a baby or medical expenses put you in a situation where you absolutely have to reduce your monthly expenses. Refinancing can allow you to extend your loan. For instance, if you owe two more years on your current loan, it may be possible to refinance for four years. Adding two years onto your loan should substantially lower you monthly payments depending on the interest rate you get. You will be paying for two years more, but you will free up some cash on a monthly basis helping you get through a rough patch.

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  • Change Lenders: Changing lender can be a pro or a con depending on the relationship you have with your lender. If your lender is tough to contact or is not getting you your payment information, changing lenders could be a pro. If you like your lender, you can try to refinance with them however you may need to look elsewhere to get the best rate.

Cons of Refinancing a Car Loan



Student Loan Consolidation: Pros and Cons – The Simple Dollar #simple #loan #calculator


#school loan consolidation
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Student Loan Consolidation: Pros and Cons

Combining all of your student loans into one may not taste as good as one-pot chili, but it could make your monthly payment easier to swallow. Photo: Jo

Graduating from college comes with the acknowledgement of great achievement and, if you re like 70% of graduates, a burden on your back in the form of student loan debt.

The average college grad leaves school with $40,000 worth of debt. But if you switched majors, transferred colleges, or went on to graduate school, you may be among the 19% that owe $50,000 and above, or the 5.6% who owe more than $100,000.

Chances are if you re dealing with student loan debt. you re not just dealing with one loan. Each semester, you may have taken out a new loan. And if you couldn t cover the costs with federal loans, you very well may have turned to a private lender, such as a bank or other lending institution (e.g. Sallie Mae) to fund the rest of your expenses.

One option you have when you begin tackling your student loan debt is to explore loan consolidation. But before you head down that road, here s what you should know.

What is Student Loan Consolidation?

If, like many college graduates, you have multiple student loans, you ve probably heard the term student loan consolidation thrown around more than once when talking about repayment options. Simply put, this is the process of combining your multiple student loans into a single, bigger loan, possibly with a new lender. 

You’ll no longer owe the original loans, and since this consolidated loan is new, it will come with a new interest rate, a new payment policy, and new terms and conditions.

There are both benefits and drawbacks to consolidating your loans, which we ll discuss in this article. Choosing to consolidate your loans is an individual choice and the right decision will depend on the specifics of your loans the types of loans, interest rates, balances, borrower benefits, and more as well as your current financial situation.

Pros and Cons of Loan Consolidation

It s important to remember that there are different types of loans most significantly, there s a big difference between federal loans (those issued by the U.S. government) and private loans (those issued by a bank, credit union, or other lending institution).

Each has its own pros and cons, which we ll get into in a little bit. But in general, here are some of the benefits and potential drawbacks when considering student loan consolidation.

Pros of Student Loan Consolidation

  • Simplicity. Consolidating your student loans can make dealing with them a little less unwieldy, with just one or two monthly payments and one or two accounts to keep track of. (Many sources advise against consolidating private loans with federal loans instead, they recommend that you consolidate your federal loans into one loan and private loans into another.) If you re forgetting to make payments and have difficulty keeping track of all of your different loans, this can keep you organized and help you to avoid missing payments which can result in late fees or damage your credit.
  • Potentially lower payments: Consolidation can potentially lower your total monthly student loan payment with either a lower interest rate or longer repayment period, but this depends on the interest rates and terms of your current loans. This is especially beneficial if you ve been struggling to make payments and can t qualify for a deferment or income based repayment plan.
  • Better credit, better rates:  If you ve graduated and gotten a (hopefully) great job, and have been making responsible financial choices such as keeping your credit card balances low and making payments on time, your credit score may have gone up. If your credit score has improved since you initially took out your loans, you may be eligible for a lower interest rate  on a new consolidation loan since lenders will consider you less of a risk than you previously were. This will obviously depend on your credit history, the rates on your existing loans, and the interest rates your new lender can offer you.
  • Dodge default: One in 10 borrowers has defaulted on federal loans, according to the Department of Education. If you re in default, loan consolidation can offer a solution, since it can possibly lower your monthly payment, depending on your loans. You may be required to get your loans into good standing before being able to consolidate them, though.

Cons of Student Loan Consolidation

  • Loss of benefits: Depending on your loans, you may lose certain borrower benefits if you combine your loans. Examples include loan forgiveness where all or a portion of your loan debt can be cleared if you meet certain conditions flexible or income-based payment options, or deferments.
  • Potentially higher rates: Depending on your current interest rates and loan amounts, you can actually end up paying higher interest rates and increasing the overall amount you owe. You may end up paying more on your loans than you would have if you did not consolidate them.
  • Longer repayment period. While it can lower your initial payment, a consolidation loan can lengthen the duration of your debt, and you may end up actually paying more over time.
  • Beware of variable rates: When consolidating your private loans with a private lender, you may be offered a low but variable interest rate (as opposed to a fixed rate). That means the rate can increase over time sometimes dramatically so and therefore so can your payments.

Consolidating Federal Loans

Hopefully, you tried to take advantage of financial aid in college   specifically, federal student loans   before turning to private loans, which often carry a higher interest rate and come with fewer borrower benefits.

If you did, you may want to learn how to specifically consolidate these federal loans. The Direct Consolidation Loan allows you to consolidate multiple federal student loans into one.



The pros and cons of using a cloud backup provider #pros #and #cons #of #cloud #storage


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The pros and cons of using a cloud backup provider

Using a cloud backup provider for data protection has a number of key advantages, such as scalability; freedom from day-to-day management; and potential cost savings on bandwidth, compared with writing data between multiple sites. But using a cloud backup provider also comes with drawbacks. such as possible latency issues and questions related to handing data over to a third party for safekeeping .

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IT Project: Migration to Cloud

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In this interview, SearchStorage.co.UK Bureau Chief Antony Adshead speaks with Chris Evans, an independent consultant with Langton Blue. about the pros and cons of using a cloud backup provider and how best to incorporate cloud backup into your data protection regime .

Read the transcript or listen to the podcast on the pros and cons of using a cloud backup service provider .

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SearchStorage.co.UK: What are the benefits and drawbacks of using a cloud backup provider ?

Evans: To set the scene here, we’re talking about backing up into a cloud storage service provided by a [cloud backup provider ], and there are a lot of those on the market today.

The sort of benefits you’d expect to get from a cloud backup provider are those you’d expect to get out of cloud [generally]. First of all, it’s massively scalable; you should be able to write as much data as you like into that cloud environment. For backup environments. that’s quite good because a lot of people don’t plan or capacity plan their backup infrastructure when they add new storage into the primary environment, so there tends to be a lag, and issues can come from that. So, not having to worry about the scalability of your backup service is a real positive benefit.

Because you’re backing up into the cloud. clearly that also means you’re not managing that infrastructure that you would if this was your own backup environment. Another benefit from that is the fact that you are connecting to a cloud service over the Internet, and if you’ve got lots of sites, you only need to have connectivity from your site to the Internet, so potentially bandwidth costs are cheaper as you’re not writing data between multiple sites.

Talking of cost, clearly costs are different for this model as you pay a fixed price for these sorts of services so it’s a lot easier to work out what your costs will be to deliver backup.

Finally, if you’re backing up to a cloud service, you’ll find you get vendor-provided additional features. So, that vendor might be doing replication between sites to make sure that the data isn’t lost, and maybe keeping multiple copies. Also you may can access the same backup from different locations so if you’ve backed up from one site you may be able restore to another.

Clearly, we have to look at disadvantages too, and there are some. The first one is latency. There’s an issue with latency into the cloud. This is less of an issue with backup data compared to, say, primary data because you’re not doing a lot of individual I/Os. You may be streaming data into the cloud, so latency could be an issue but not as much as if it was primary data.

Another disadvantage is that you’re passing responsibility for this data to a third party. Whereas you may maintain those backups yourself and have encrypted them and done work to make sure your backups are secure, you’re now passing that responsibility on to someone else, and you want to be sure they’re operating to a similar set of standards around security and availability. You could choose to encrypt your backups before you write them, and that will give you some more security.

The final disadvantage is [that] you’re dependent on that one cloud backup provider, so what happens if that provider goes out of business; how do you get your data back? The provider may have the data in a proprietary format so it may not be easy to extract yourself from that provider, and that’s a real issue if you want to move your backups elsewhere. You could be tied in to that backup provider for, say, seven years if that is what the retention time for backups is, so you need to be aware of that; you have a dependency on that [provider].

SearchStorage.co.UK: How can I incorporate cloud as a backup target into my data protection regime?

Evans: Let’s talk about backup products in general. Typically, a lot of organisations will use some of the standard products that are out there: products like NetBackup from Symantec or products from CA and so on. You will find a lot of those products now will integrate directly with a cloud provider, so you can add the cloud environment as a target from within that backup infrastructure and direct some of your backups into that cloud architecture.

Another possibility is to look at the APIs provided by the cloud vendors and write your own solution. That, to me, sounds like an expensive route, but it is a possibility if you’ve got very specific backup requirements in place.

A third option is to look at the providers who use things like iSCSI targets. That allows you to present storage into your environment as if it were a LUN. and you can use whatever backup methodology you’re using internally to back up to that LUN, and of course then you’re securing that data off-site.

I think the issue with all these methods is that you really need to think through exactly how you’ll use these backups going forward and how you’ll be able to track what’s going on and how you’ll be writing it out and how you’ll maintain some sort of independence from that provider. I think you need to look at it in detail and say, “If I back up to one provider, how can I move that to another?” Those are probably the more interesting and sensible questions to be thinking of as you try and add this to your existing backup regime.

This was last published in January 2012

mcorum – 12 Jun 2015 10:11 AM

Latency is always going to be an issue, but there have been some good advances made to help address those issues. One option to help with the latency of a local restore is a hybrid cloud DR service where an on-site appliance gathers backups from the client machines and handles the transfer of that data to the cloud. IT also stores a local copy, allowing for a restore to be performed locally much faster than a purely cloud DR service. I suspect that these solutions will become more available, making it a viable option for more businesses.

Senditgl – 26 Jul 2017 4:19 PM

Agreed, cloud storage services are great for back-up. There are many options on the market, and not at high costs, so it’s suitable even for small businesses. If you’re concerned about privacy ask each provider about their policy. If your business is dependant on collaboration and home office, then you should get something which includes online collaboration features. Sendit.gl is especially designed for heavy file storage and includes the option of receiving feedback from people you’ve shared files with.



The TSP Loan Guide, Part 2: Pros and Cons of TSP Loans – TSP Allocation Guide #best #rate #loans


#tsp loan
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The TSP Loan Guide, Part 2: Pros and Cons of TSP Loans

What are the advantages of Thrift Savings Plan loans?

(1) The interest rate is very low and you are paying it to yourself instead of to a bank. So the loan is essentially free to you, other than a small administrative charge.

(2) You avoid the 10 percent penalty on early withdrawals from retirement accounts. If you aren’t old enough, or are old enough but haven’t separated from federal service, you would have to pay this penalty if you withdrew the money outright.

(3) The fee charged for TSP loans is a very low, flat fee of $50.

(4) The TSP loan application is quick, easy and straightforward. No one is turned down for a loan assuming sufficient employee contributions and earnings. No credit check is required. Other types of loans require a more complex application process, a credit check and more fees.

(5) There is no negative impact on your credit score. A TSP loan does not appear on your credit report, because it is not really a loan (you are using your own savings). If a TSP loan borrower loses his or her job, retires or leaves federal service and is unable to pay off the loan balance, the unpaid balance will be classified as a distribution for which income taxes must be paid, but it will not show up on your credit report as a default.

What are the disadvantages of TSP loans?

(1) The most significant disadvantage is missed opportunity. The most powerful feature of a retirement plan like the TSP is the tax-deferred growth and compounding of earning. Removing funds from your TSP account can significantly affect its growth. The inevitable result will be a smaller TSP balance at retirement, which will impact the way that you live out your golden years.

For example, lets say you took out a $50,000 residential property TSP home loan at the current interest rate of 2.125% and paid it off over 15 years. At the end of those 15 years you would have paid back $58,500 (and earned an additional $950 in interest on the principal after you paid it back). Your nest egg would have grown by only about $9500 in 15 years, and nearly all of that money came out of your pocket. Compare that to $50,000 compounding at 10.6% (the stock market s average rate of return over the past 25 years). At the end of 15 years you would have $243,481.

(2) Potential tax penalty. If you fail to pay off a TSP loan, income taxes on the distribution will be due. An additional IRS early withdrawal penalty of 10 percent will be applied if the account owner is younger than age 59.5 at the time of the loan default.

(3) A TSP loan of either type is not a mortgage. Therefore, the TSP loan interest payments are not tax deductible, as they might be for a mortgage or home equity loan.

(4) If you leave Federal service, you must pay off the loan within 90 days of the date when your agency reports your separation to the TSP. Any unpaid balance will be reported as a taxable distribution

The Double Tax Myth of TSP Loans

In the Disadvantages section of most websites which address TSP loans, the authors usually blindly copy some original source which incorrectly stated that taking a TSP loan results in paying taxes twice because the TSP account holder is moving tax-deferred assets into the taxable realm and after-tax income must be used to repay the loan. Suze Orman popularized the notion while discussing 401K accounts (which have the same tax treatment as the TSP) and this myth is widely spread across the internet.

Let’s say you want to borrow $10,000 from your Thrift Savings Plan account for a year. The TSP G Fund interest rate at that time is 5%, which you must pay back to yourself. That $10,000 was a pre-tax contribution, so you never paid income taxes on it. You take it all out, leaving yourself with $10,000 in cash. You haven’t paid any taxes on that $10,000. You leave it under your mattress, and a year later pay back the same $10,000 plus $500 in interest. You still haven’t paid taxes on the $10,000. When you eventually withdraw the money, then you finally must pay taxes. So what was the only thing taxed twice? The part attributable to the $500. Not the $10,000.

Now, does it matter if during the year your brother took the original 10,000 and then later replaced it under your mattress with a different $10,000? The answer is no. As long as you pay back the $10,000, that is all that matters.

The only part that is taxed twice is the interest. And since you are paying yourself the interest, this small double-tax is really the only cost of doing this loan. Using the example above and assuming a 25% marginal tax bracket, that means you only got taxed an extra $125 on that $10,000 loan. This is the same as getting a regular loan with a 1.25% interest rate.



The Pros & Cons of Consolidating Your Student Loans #203k #loan


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The Pros & Cons of Consolidating Your Student Loans



Personal Loan Pros #citiassist #student #loan


#best payday loan
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Quick Easy Personal Loans for All Types of Credit

We understand that people from all walks of life, at one point or another, face financial hardships. During these financial hardships are when people need the most help in finding a solution to their problem. That s where we come in. We help consumers find unsecured personal loans even if they have bad credit or been declined by the big banks. There are several types of personal loans, but the type of loan you qualify for depends on your situation, such as residence, income, credit and how quickly you need the money.

Loan Types Available:

Each type of loan has its pros and cons. Please read the description for each loan type below and see which one makes sense for you.

Payday loans  are one of the most expensive ways to borrow money. These loans are intended for short-term emergency cash. Qualifying for a payday loan is easy, and it s one of the reasons why so many people use them. There are no credit checks and the application process is fast. An online application can take less than 5 minutes to fill out, while a trip to the local payday loan store may take 30 minutes to an hour, depending on how far you are from the store and how long the lines are. You can get your money the same day in-store, or overnight if you apply online. We recommend applying online for several reasons .

Installment loans carry lower interest rates, higher loan amounts ($2,000-35,000) and longer repayment terms. However, qualifying for an installment loan may be slightly more difficult than qualifying for a payday loan. For example, an installment loan may require better credit and a higher income compared to a payday loan. The funding speed for installment loans vary from lender to lender, but typically you can get your loan deposited to your bank account in a couple of business days.

Peer-to-peer loans have been around for quite some time, but many people still have not heard of it. Peer-to-peer loans are provided through a handful of peer-to-peer lending platforms. These lending platforms allow you to borrow considerable amounts of money from a group of investors at interest rates that are significantly lower than a payday or installment loan. In order to qualify for a peer-to-peer loan, you will need fair credit or better. Funding for peer-to-peer loans may take a few days to a week, so if you re looking for an overnight loan, this isn t it.

Military loans are personal loans that conform to the lending laws set forth by the Military Lending Act of 2006. This law makes it illegal for payday lenders to offer loans to members of the military, as well as providing certain protections and benefits. If you are an active member of the military, you should definitely consider a military loan  if you have less than perfect credit.

Tribal loans are offered by Native American tribal lenders and generally carry the highest fees out of all personal loan types. These types of lenders are federally recognized entities, but they do not typically operate according to state laws. For this reason, you may find that tribal lenders often times go beyond the limits of many state laws, and this may include extremely high interest rates and loan amounts that exceed state law limitations. We do not recommend using tribal loans because they are deemed by many to be illegal. However, they are listed here for your reference.

Now that you have a basic understanding of each loan type, you can begin your search for a lender. Be sure to read the fine print and understand the terms of the loan before applying.



Construction Loan Pros, Cons #best #car #loans


#construction loan rates
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Construction loan has more cons than pros

Dear Real Estate Adviser,

I want to build a new home, and the builder wants me to get a construction loan. I don’t fully understand what that is. Can you tell me the pros and cons of this type of loan.

Dear Diane,

It’s the type of loan that is most convenient for the builder — but not always for the buyer. You would finance the cost to construct the house rather than buying a house that’s already been constructed by the builder. These are often called “story loans” because your lender will want to get a very thorough construction-plan narrative and timeline before it will approve funding. Lenders are not a big fan of fiction, by the way.

But such construction loans can be tough to acquire for individuals these days. For peace of mind, I’d put the onus on the builder and ask him to carry the loan. That way, the contractor or design-build firm gets your design, you OK it, he builds it and you don’t have to take possession until it’s completed to your satisfaction. The builder is more motivated to finish work on time this way.

Either way, make sure your builder checks out. Ask for references, check with the attorney general’s office, obtain a credit report, and check for lawsuits and outstanding liens. One home inspector friend of mine says you should go to city hall and check with a few customers not listed as references. Their names will appear on building permits.

If your builder won’t agree to handle the loan and you decide to carry it, here is what will happen. Funds are typically disbursed in stages as the project progresses, a process that can be a hassle for an individual. You will be required to make only interest payments during construction, which will probably be at a higher rate than the rate on your permanent mortgage — a home loan that will kick in only after the project is completed.

You will want to get the place livable and exit from the construction-loan phase as soon as possible. Many lenders require that a certificate of occupancy be issued before they will finance the permanent loan. Lenders typically allow for overruns and changes as construction progresses via a reserve account. Unused overages are simply credited back after the house is finished, while outstanding shortages are added to the loan balance.

Beware! Anything not in the initial contract will cost you extra. Builders are always looking for add-ons and their ensuing markups, which are huge profit centers for them.

You should know that one of the most common complaints we hear about new-home construction is that construction typically takes longer than planned and usually comes in over budget. If you obtain the construction loan, I suggest you structure your contract to call for a late-completion penalty that the builder would pay by assuming a chunk of your interest payments.

Do your homework and negotiate everything. And be ready, by the way, to show up at the construction site at every major phase of construction to make sure you are getting everything you paid for.

Good luck!

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The Pros & Cons of Consolidating Your Student Loans #fast #personal #loans


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The Pros & Cons of Consolidating Your Student Loans



How Do FHA Loans Work? (Pros and Cons) #home #equity #loan


#what is fha loan
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FHA Loan Basics

By Justin Pritchard. Banking/Loans Expert

Justin Pritchard helps consumers navigate the world of banking.

Loans from the Federal Housing Administration (FHA) are popular options for borrowers because they allow you to buy a home with a relatively small down payment. Designed to promote home ownership, FHA loans make it easier for people to qualify for a mortgage. But they’re not for everybody, so it pays to understand how they work and when they work best

What is an FHA Loan?

In other words, the offers a guarantee to your bank: if you fail to repay the mortgage, FHA will step up and repay the bank instead. Because of this guarantee, lenders are willing to make large mortgage loans in cases when they’d otherwise be unwilling approve loan applications The FHA, an agency of the United States government, has plenty of dough to deliver on that promise.

Why are They so Great?

FHA loans are not perfect, but they are a great fit in some situations. The main appeal is that they make it easy to buy property, but don’t forget that those benefits always come with tradeoffs.

Here are some of the most attractive features:

Down payment: FHA loans allow you to buy a home with a down payment as small as 3.5%. Other loan programs generally require a much larger down payment.

Other peoples’ money: it’s easier to use gifts for down payment and closing costs. In addition, sellers can pay up to 6% of the loan amount towards a buyer’s closing costs. You’re most likely to benefit from that in a buyer’s market, but those do come around from time to time.

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Assumable: a buyer can “take over” your FHA loan if it’s assumable. That means they’ll pick up where you left off – benefiting from lower interest costs (because you’ve already gone through the highest-interest years). Depending whether or not have changed by the time you sell, the buyer might also enjoy a low interest rate that’s unavailable elsewhere.

A chance to reset: If you’ve recently come out of bankruptcy or foreclosure, it’s easier to get an FHA loan than a loan that does not come with any government guarantee (two or three years after financial hardship is enough to qualify with FHA).

Home improvement: certain FHA loans can be used to pay for home improvement (through FHA 203k programs)

Qualification: it’s easier to qualify for an FHA loan.

How do you Qualify for an FHA Loan?

The FHA makes it relatively easy to qualify for a loan. Again, the government guarantees the loan, so lenders are more willing to approve loans. However, lenders can (and do) set standards that are stricter than FHA requirements. If you’re having trouble with one FHA approved lender, you might have better luck with another.

Note: you never know until you apply. Even if you think you won’t qualify after reading this page, talk with an FHA approved lender to find out for sure.

Income limits: there are none. You’ll need enough to show that you can repay the loan (see below) but these loans are geared towards lower income borrowers. If you’re fortunate enough to have a high income, you aren’t disqualified like you might be with certain first time home buyer programs.

Debt to income ratios : to qualify for an FHA loan, you’ll need to have reasonable debt to income ratios. That means that the amount you spend on monthly payments needs to be “reasonable” when compared to your monthly income. In general, you have to be better than 31/43, but in some cases it’s possible to get approved with D/I ratios closer to 55%.

Example: assume you earn $3,500 per month. To meet the requirements, it is best to keep your monthly housing payments below $1,225 (because $1,225 is 31% of $3,500). If you have other debts (such as credit card debt ), all of your monthly payments combined should be less than $1,505.

To figure out how much you might spend on a mortgage payment. use our online calculator .

Credit score: borrowers with low credit scores are more likely to get approved if they apply for an FHA loan. Scores can go as low as 580 if you want to make a 3.5% down payment. If you’re willing and able to make a larger down payment, your score can potentially be lower still.

Loan amount : there are limits on how much you can borrow. In general, you’re limited to modest loan amounts relative to home prices in your area. To find the limits in your region, visit HUD’s Website .

How do FHA Loans Work?

The FHA promises to pay lenders if a borrower defaults on an FHA loan. To fund this obligation, the FHA charges borrowers a fee. Home buyers who use FHA loans pay an upfront mortgage insurance premium (MIP) of 1.75%. They also pay a modest ongoing fee with each monthly payment.

If a borrower defaults on an FHA loan, the FHA uses those collected insurance premiums to compensate the bank.

Why Not Use an FHA Loan?

While they come with appealing features, you may find that FHA loans are not for you. They may not provide enough money if you need a large loan. But the main drawback is that the upfront mortgage insurance premium (and ongoing premiums) can cost more than private mortgage insurance would cost.

In some cases, you can still buy a house with a very little down using a standard loan (not an FHA loan). Especially if you’ve got good credit. you might find competitive offers that beat FHA loans.

As always, you should compare offers from several different lenders – including FHA loans and conventional loans – before you agree to anything.



Pros and Cons of Refinancing a Car Loan #cheapest #loans


#refinance car loan
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Pros and Cons of Refinancing a Car Loan

By Emily Delbridge. Car Insurance and Loans Expert

Emily Sue Delbridge has a strong family history in the insurance industry. She has been in the insurance business since 2005 with her primary focus on personal lines insurance. Read more

Refinancing a car loan can seem appealing at times. It is important to take a close look to make sure you will benefit from refinancing. Refinancing has both pros and cons depending on your situation. Making educated decisions about your finances will keep you on the right track to financial well being.

Pros of Refinancing a Car Loan

  • Get more money out: If you currently owe less than what your vehicle is worth, you may be able to access more money by refinancing. For instance, you have owned your vehicle for three years. Your vehicle is currently worth $8000 and you owe $5000. You need money for a small home improvement. One option would be to refinance your vehicle for $6500. You will still owe less than what the vehicle is worth and have $1500 after the new loan pays off your previous $5000 balance. The $1500 can now be used for your home improvement.
  • Lower your payments by extending the loan: Sometimes a life changing event such as a baby or medical expenses put you in a situation where you absolutely have to reduce your monthly expenses. Refinancing can allow you to extend your loan. For instance, if you owe two more years on your current loan, it may be possible to refinance for four years. Adding two years onto your loan should substantially lower you monthly payments depending on the interest rate you get. You will be paying for two years more, but you will free up some cash on a monthly basis helping you get through a rough patch.

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  • Change Lenders: Changing lender can be a pro or a con depending on the relationship you have with your lender. If your lender is tough to contact or is not getting you your payment information, changing lenders could be a pro. If you like your lender, you can try to refinance with them however you may need to look elsewhere to get the best rate.

Cons of Refinancing a Car Loan



Personal Loan Pros #low #interest #car #loans


#best payday loan
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Quick Easy Personal Loans for All Types of Credit

We understand that people from all walks of life, at one point or another, face financial hardships. During these financial hardships are when people need the most help in finding a solution to their problem. That s where we come in. We help consumers find unsecured personal loans even if they have bad credit or been declined by the big banks. There are several types of personal loans, but the type of loan you qualify for depends on your situation, such as residence, income, credit and how quickly you need the money.

Loan Types Available:

Each type of loan has its pros and cons. Please read the description for each loan type below and see which one makes sense for you.

Payday loans  are one of the most expensive ways to borrow money. These loans are intended for short-term emergency cash. Qualifying for a payday loan is easy, and it s one of the reasons why so many people use them. There are no credit checks and the application process is fast. An online application can take less than 5 minutes to fill out, while a trip to the local payday loan store may take 30 minutes to an hour, depending on how far you are from the store and how long the lines are. You can get your money the same day in-store, or overnight if you apply online. We recommend applying online for several reasons .

Installment loans carry lower interest rates, higher loan amounts ($2,000-35,000) and longer repayment terms. However, qualifying for an installment loan may be slightly more difficult than qualifying for a payday loan. For example, an installment loan may require better credit and a higher income compared to a payday loan. The funding speed for installment loans vary from lender to lender, but typically you can get your loan deposited to your bank account in a couple of business days.

Peer-to-peer loans have been around for quite some time, but many people still have not heard of it. Peer-to-peer loans are provided through a handful of peer-to-peer lending platforms. These lending platforms allow you to borrow considerable amounts of money from a group of investors at interest rates that are significantly lower than a payday or installment loan. In order to qualify for a peer-to-peer loan, you will need fair credit or better. Funding for peer-to-peer loans may take a few days to a week, so if you re looking for an overnight loan, this isn t it.

Military loans are personal loans that conform to the lending laws set forth by the Military Lending Act of 2006. This law makes it illegal for payday lenders to offer loans to members of the military, as well as providing certain protections and benefits. If you are an active member of the military, you should definitely consider a military loan  if you have less than perfect credit.

Tribal loans are offered by Native American tribal lenders and generally carry the highest fees out of all personal loan types. These types of lenders are federally recognized entities, but they do not typically operate according to state laws. For this reason, you may find that tribal lenders often times go beyond the limits of many state laws, and this may include extremely high interest rates and loan amounts that exceed state law limitations. We do not recommend using tribal loans because they are deemed by many to be illegal. However, they are listed here for your reference.

Now that you have a basic understanding of each loan type, you can begin your search for a lender. Be sure to read the fine print and understand the terms of the loan before applying.



The Pros & Cons of Consolidating Your Student Loans #college #grants


#student loans
#

The Pros & Cons of Consolidating Your Student Loans



Personal Loan Pros #debt #relief


#best payday loan
#

Quick Easy Personal Loans for All Types of Credit

We understand that people from all walks of life, at one point or another, face financial hardships. During these financial hardships are when people need the most help in finding a solution to their problem. That s where we come in. We help consumers find unsecured personal loans even if they have bad credit or been declined by the big banks. There are several types of personal loans, but the type of loan you qualify for depends on your situation, such as residence, income, credit and how quickly you need the money.

Loan Types Available:

Each type of loan has its pros and cons. Please read the description for each loan type below and see which one makes sense for you.

Payday loans  are one of the most expensive ways to borrow money. These loans are intended for short-term emergency cash. Qualifying for a payday loan is easy, and it s one of the reasons why so many people use them. There are no credit checks and the application process is fast. An online application can take less than 5 minutes to fill out, while a trip to the local payday loan store may take 30 minutes to an hour, depending on how far you are from the store and how long the lines are. You can get your money the same day in-store, or overnight if you apply online. We recommend applying online for several reasons .

Installment loans carry lower interest rates, higher loan amounts ($2,000-35,000) and longer repayment terms. However, qualifying for an installment loan may be slightly more difficult than qualifying for a payday loan. For example, an installment loan may require better credit and a higher income compared to a payday loan. The funding speed for installment loans vary from lender to lender, but typically you can get your loan deposited to your bank account in a couple of business days.

Peer-to-peer loans have been around for quite some time, but many people still have not heard of it. Peer-to-peer loans are provided through a handful of peer-to-peer lending platforms. These lending platforms allow you to borrow considerable amounts of money from a group of investors at interest rates that are significantly lower than a payday or installment loan. In order to qualify for a peer-to-peer loan, you will need fair credit or better. Funding for peer-to-peer loans may take a few days to a week, so if you re looking for an overnight loan, this isn t it.

Military loans are personal loans that conform to the lending laws set forth by the Military Lending Act of 2006. This law makes it illegal for payday lenders to offer loans to members of the military, as well as providing certain protections and benefits. If you are an active member of the military, you should definitely consider a military loan  if you have less than perfect credit.

Tribal loans are offered by Native American tribal lenders and generally carry the highest fees out of all personal loan types. These types of lenders are federally recognized entities, but they do not typically operate according to state laws. For this reason, you may find that tribal lenders often times go beyond the limits of many state laws, and this may include extremely high interest rates and loan amounts that exceed state law limitations. We do not recommend using tribal loans because they are deemed by many to be illegal. However, they are listed here for your reference.

Now that you have a basic understanding of each loan type, you can begin your search for a lender. Be sure to read the fine print and understand the terms of the loan before applying.



Student Loan Consolidation: Pros and Cons – The Simple Dollar #interest #payment #calculator


#school loan consolidation
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Student Loan Consolidation: Pros and Cons

Combining all of your student loans into one may not taste as good as one-pot chili, but it could make your monthly payment easier to swallow. Photo: Jo

Graduating from college comes with the acknowledgement of great achievement and, if you re like 70% of graduates, a burden on your back in the form of student loan debt.

The average college grad leaves school with $40,000 worth of debt. But if you switched majors, transferred colleges, or went on to graduate school, you may be among the 19% that owe $50,000 and above, or the 5.6% who owe more than $100,000.

Chances are if you re dealing with student loan debt. you re not just dealing with one loan. Each semester, you may have taken out a new loan. And if you couldn t cover the costs with federal loans, you very well may have turned to a private lender, such as a bank or other lending institution (e.g. Sallie Mae) to fund the rest of your expenses.

One option you have when you begin tackling your student loan debt is to explore loan consolidation. But before you head down that road, here s what you should know.

What is Student Loan Consolidation?

If, like many college graduates, you have multiple student loans, you ve probably heard the term student loan consolidation thrown around more than once when talking about repayment options. Simply put, this is the process of combining your multiple student loans into a single, bigger loan, possibly with a new lender. 

You’ll no longer owe the original loans, and since this consolidated loan is new, it will come with a new interest rate, a new payment policy, and new terms and conditions.

There are both benefits and drawbacks to consolidating your loans, which we ll discuss in this article. Choosing to consolidate your loans is an individual choice and the right decision will depend on the specifics of your loans the types of loans, interest rates, balances, borrower benefits, and more as well as your current financial situation.

Pros and Cons of Loan Consolidation

It s important to remember that there are different types of loans most significantly, there s a big difference between federal loans (those issued by the U.S. government) and private loans (those issued by a bank, credit union, or other lending institution).

Each has its own pros and cons, which we ll get into in a little bit. But in general, here are some of the benefits and potential drawbacks when considering student loan consolidation.

Pros of Student Loan Consolidation

Cons of Student Loan Consolidation

Consolidating Federal Loans

Hopefully, you tried to take advantage of financial aid in college   specifically, federal student loans   before turning to private loans, which often carry a higher interest rate and come with fewer borrower benefits.

If you did, you may want to learn how to specifically consolidate these federal loans. The Direct Consolidation Loan allows you to consolidate multiple federal student loans into one.



Debt Consolidation: Pros and Cons #loan.com


#unsecured debt consolidation loans
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If you are considering debt consolidation, understand the advantages and disadvantages.

Whether you are teetering on the edge of bankruptcy or just trying to better manage your finances, you can’t help but notice all the advertisements touting debt consolidation. But is debt consolidation a good option for you?

Read on to learn about the different debt consolidation options and the pros and cons of each.

(To learn about other ways to handle debt, see our Debt Management  topic area.)

What Is Debt Consolidation?

With debt consolidation, you get a single loan to pay off all of your smaller loans, thereby leaving you with just one monthly payment rather than several. The theory is that one payment will be easier to manage. The goal is to lower the interest rate and the monthly payment while paying off your debt more quickly.

Debt consolidation is not the same as debt settlement. In debt consolidation, you pay your debt in full with no negative consequences to your credit.

Secured vs. Unsecured Loans

When you take out a secured loan, such as a mortgage or a car loan, you pledge certain property, such as your home or your car, to secure the repayment of the loan. For example, when you obtain a mortgage loan, your house is security for repayment. If you fall behind, the mortgage holder can foreclose on your house to satisfy the loan.

Unsecured loans are based only on your promise to pay and are not secured by any property that can be foreclosed or repossessed to pay the loan. Credit cards are examples of unsecured loans. Unsecured loans usually have a higher interest rate because they carry more risk for the lender.

Debt Consolidation Through Secured Loans

There are many options for debt consolidation using secured loans. You can refinance your house, take out a second mortgage, or get a home equity line of credit. You can take out a car loan, using your automobile as collateral. You can also use other assets as security for a loan. A 401K loan uses your retirement fund as collateral. If you have a life insurance policy with cash value, you may be able to obtain a loan against the policy. A variety of financing firms will also loan you money against lawsuit claims, lottery winnings, and annuities.

Any of these could be used for debt consolidation. But are they the right option for you?

Pros of Consolidating With a Secured Loan

Often, secured loans carry lower interest rates than unsecured loans so they may save your money on interest payments. Lower interest rates will likely make the monthly payment lower and more affordable. Sometimes, the interest payments are even tax deductible. For example, in many instances interest paid on loans secured by real estate is allowed as a tax deduction.

A single monthly payment with a lower interest rate is likely to ease your financial burden substantially. Also, secured loans are generally easier to obtain because they carry less risk for the lender.

Cons of Consolidating With a Secured Loan

there is a huge downside to consolidating unsecured loans into one secured loan: When you pledge assets as collateral, you are putting the pledged property at risk. If you can’t pay the loan back, you could lose your house, car, life insurance, retirement fund, or whatever else you might have used to secure the loan. Certain assets, such as life insurance or retirement funds may not be available to you if the loan is not paid back before you need to use them.

The term of a secured loan may also be longer than the term of the debt obligations that you consolidated. This could cause the total interest that you pay over the life of the consolidation loan to be greater than the interest would have been on the individual debts, even though the monthly payment is lower.

Debt Consolidation Through Unsecured Loans

While unsecured personal debt consolidation loans used to be quite common, they are less likely to be available to people who need them today. Generally, an unsecured loan will require the borrower to have very good credit. Accepting a no interest, or low interest, introductory rate on a credit card is often used as a substitute for an unsecured personal loan for debt consolidation.

Pros of Consolidating With an Unsecured Loan

The biggest benefit to an unsecured debt consolidation loan is that no property is at risk. And, while the interest rate may be higher than a secured loan, it may be less than is charged on several different credit card balances, thereby lowering your interest burden and your payment.

Cons of Consolidating With an Unsecured Loan

An unsecured debt consolidation loan may be hard to get if you don’t have sterling credit. Most people who need debt consolidation loans may not qualify. Also, interest rates are generally higher than secured loans. This may result in a payment that is not low enough to make a difference in your financial situation.

Using balance transfer options on no-interest or low-interest credit card offers are tricky. Often, there is a transfer fee in the fine print which negates some of the savings. There are also rules which may diminish the benefits. If you use the card for anything else, the other charges may generate interest while payments are applied first to the no-interest balance. Also, the no-interest or low-interest period is generally limited. If you can’t pay the debt off during this time, you might end up paying higher interest once the special offer period runs out.

The Psychological Pros and Cons of Debt Consolidation

While the benefit of consolidating your debts into one loan with one lower monthly payment may provide you with a great deal of emotional and financial relief, it may also leave you feeling prematurely confident about your financial situation. This could cause you to let your guard down and incur additional debt before you have paid off the consolidation loan, starting the cycle all over again.



The TSP Loan Guide, Part 2: Pros and Cons of TSP Loans – TSP Allocation Guide #fast #loans #no #credit #check


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The TSP Loan Guide, Part 2: Pros and Cons of TSP Loans

What are the advantages of Thrift Savings Plan loans?

(1) The interest rate is very low and you are paying it to yourself instead of to a bank. So the loan is essentially free to you, other than a small administrative charge.

(2) You avoid the 10 percent penalty on early withdrawals from retirement accounts. If you aren’t old enough, or are old enough but haven’t separated from federal service, you would have to pay this penalty if you withdrew the money outright.

(3) The fee charged for TSP loans is a very low, flat fee of $50.

(4) The TSP loan application is quick, easy and straightforward. No one is turned down for a loan assuming sufficient employee contributions and earnings. No credit check is required. Other types of loans require a more complex application process, a credit check and more fees.

(5) There is no negative impact on your credit score. A TSP loan does not appear on your credit report, because it is not really a loan (you are using your own savings). If a TSP loan borrower loses his or her job, retires or leaves federal service and is unable to pay off the loan balance, the unpaid balance will be classified as a distribution for which income taxes must be paid, but it will not show up on your credit report as a default.

What are the disadvantages of TSP loans?

(1) The most significant disadvantage is missed opportunity. The most powerful feature of a retirement plan like the TSP is the tax-deferred growth and compounding of earning. Removing funds from your TSP account can significantly affect its growth. The inevitable result will be a smaller TSP balance at retirement, which will impact the way that you live out your golden years.

For example, lets say you took out a $50,000 residential property TSP home loan at the current interest rate of 2.125% and paid it off over 15 years. At the end of those 15 years you would have paid back $58,500 (and earned an additional $950 in interest on the principal after you paid it back). Your nest egg would have grown by only about $9500 in 15 years, and nearly all of that money came out of your pocket. Compare that to $50,000 compounding at 10.6% (the stock market s average rate of return over the past 25 years). At the end of 15 years you would have $243,481.

(2) Potential tax penalty. If you fail to pay off a TSP loan, income taxes on the distribution will be due. An additional IRS early withdrawal penalty of 10 percent will be applied if the account owner is younger than age 59.5 at the time of the loan default.

(3) A TSP loan of either type is not a mortgage. Therefore, the TSP loan interest payments are not tax deductible, as they might be for a mortgage or home equity loan.

(4) If you leave Federal service, you must pay off the loan within 90 days of the date when your agency reports your separation to the TSP. Any unpaid balance will be reported as a taxable distribution

The Double Tax Myth of TSP Loans

In the Disadvantages section of most websites which address TSP loans, the authors usually blindly copy some original source which incorrectly stated that taking a TSP loan results in paying taxes twice because the TSP account holder is moving tax-deferred assets into the taxable realm and after-tax income must be used to repay the loan. Suze Orman popularized the notion while discussing 401K accounts (which have the same tax treatment as the TSP) and this myth is widely spread across the internet.

Let’s say you want to borrow $10,000 from your Thrift Savings Plan account for a year. The TSP G Fund interest rate at that time is 5%, which you must pay back to yourself. That $10,000 was a pre-tax contribution, so you never paid income taxes on it. You take it all out, leaving yourself with $10,000 in cash. You haven’t paid any taxes on that $10,000. You leave it under your mattress, and a year later pay back the same $10,000 plus $500 in interest. You still haven’t paid taxes on the $10,000. When you eventually withdraw the money, then you finally must pay taxes. So what was the only thing taxed twice? The part attributable to the $500. Not the $10,000.

Now, does it matter if during the year your brother took the original 10,000 and then later replaced it under your mattress with a different $10,000? The answer is no. As long as you pay back the $10,000, that is all that matters.

The only part that is taxed twice is the interest. And since you are paying yourself the interest, this small double-tax is really the only cost of doing this loan. Using the example above and assuming a 25% marginal tax bracket, that means you only got taxed an extra $125 on that $10,000 loan. This is the same as getting a regular loan with a 1.25% interest rate.



Pros and cons of private-mortgage loans. #home #loan #interest #calculator


#private loans
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Pros and cons of private-mortgage loans

By HSH.com. September 13, 2013, 10:02:00 AM EDT

The problem for most borrowers in recent years hasn’t been low mortgage rates. it has been the strict lending requirements imposed by most lenders. If you’re having trouble qualifying for a conventional mortgage, a private-mortgage lender may be an option.

Private money funds, also known as “hard money,” usually come from private investors or private lending companies who are willing to loan homebuyers money to purchase a specific property, says Jared Martin, chief executive officer of Keystone Funding, Inc. in Media, Pa.

Homebuyers can often find these lenders by joining a real estate investment club in their area, Martin says, but these loans are most often secured by home investors. Unfortunately, not every homeowner will be successful getting money from a private lender.

Here are the pros and cons regarding private mortgage loans:

Pro: Easy to qualify

The loans could be a great option for homebuyers who are not able to qualify for a traditional mortgage because of less-than-perfect credit, debt or for self-employed individuals who can’t always provide proof of a steady income, Martin says.

“The underwriting of the hard money loan is not so ‘person’ focused as it is ‘property’ focused,” says Brian Frederick, a certified financial planner who advises real estate investors in Scottsdale, Ariz. “A person with poor credit can get a hard money loan if the project shows a likely profit.”

Con: Short payback period

Private loans aren’t paid back over 30 years like a traditional mortgage. Many private-money lenders expect the loan to be repaid within an extremely short time period, such as six to 12 months, says Martin, though “it could occasionally go to two years,” he says.

Private lenders are often looking for a quick return for their money, and they usually aren’t set up to service a loan for several years the way a typical mortgage company is, he says.

For this reason alone, most homebuyers should look elsewhere for mortgages, says Jeff Curtis, a Realtor and director of mentoring at Keller Williams in Pasadena.

Pro: Great for ‘flippers’

However, you might consider such a short repayment period if you plan to sell or “flip” the house within that timeframe, or expect to be able to qualify for a conventional refinance within a few months after acquiring the property, Curtis says.

If you plan to make extensive renovations in a short time period that will boost the value of the home, it is possible that you could sell or refinance the property fairly quickly, he says.

Pro: Geared toward ‘fixer-upper’ properties

Homes that need extensive renovations generally can’t qualify for conventional mortgages, no matter how good the borrower’s credit is, says Frederick. In those cases, private money can play an important role, he says.

“Some vacant homes may have been vandalized or someone may have stolen the plumbing,” he says. A private lender could step in and provide financing to get the house in sellable condition, and then “flip” the house, says Frederick.

Con: High interest rates

Interest rates are much higher with private-money lending than with conventional loans, Curtis says. In fact, mortgage rates are sometimes more than double typical 30-year mortgage rates, often 12 to 20 percent per year, he says.

Mortgage rates are so high because private lenders don’t usually require perfect credit. “Loans from private lenders are generally secured by the property in question, so it’s usually not as important to the lender if the borrower has pristine credit or not,” Curtis says.

Pro: Short approval process

If you have a house that you believe is a candidate for a private loan, the approval process often takes just a couple of weeks, as opposed to 30 to 45 days for a conventional loan, Frederick says.

For many borrowers, getting a loan that quick is a good tradeoff for higher interest rates. “Private money lenders don’t require a long drawn-out loan process like a conventional mortgage does,” Frederick says.

If you have a house you want to rehab, and you feel that you could improve it enough to boost its worth in a short period of time that would allow you to pay off a private loan and replace it with a conventional refinance or sale, then getting a private loan is a viable option, says Frederick.

As long as you understand the caveats and do your research, it is possible to successfully secure a property without a conventional loan.



Pros and Cons of Interest Only Loans #study #loan


#interest only loan calculator
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Benefits of Interest Only Loans

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Interest only loans can work very well when you intend to use them properly. For example, your income might be variable (because of bonuses or commission based work). In this case, you might save on your monthly payment (by paying interest only) and make larger payments against the principal when you have extra money .

Of course, you have to actually make those larger payments.

You can also customize your amortization schedule with an interest only loan. See How Amortization Works for details on how amortization affects on your mortgage. In many cases, your additional payment against principal will result in a lower required payment in following months (because the principal amount that you’re paying interest on has decreased).

Pitfalls of Interest Only Loans

Interest only loans also have some drawbacks. The main problem is that you don’t build any equity in your home.

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This can be a problem because:

Because you’re only paying interest, you don’t reduce the balance on your loan. Instead, you’re just servicing a debt – or “treading water” – if you only make the required interest payments.

Imagine that you buy a home for $300,000, and you borrow 80% (or $240,000). If you make interest only payments, you’ll always owe $240,000 on that home. If the home loses value and is worth only $280,000 when you sell it, you won’t get your full $60,000 from the down payment back. If the price drops below $240,000 when you sell, you’ll have to pay out of pocket to unload the house.

Of course, you have to pay the money back at some point. Usually, you end up selling the home or refinancing the mortgage to pay off your interest only loan. If you end up keeping the loan, the bank might make you pay principal back after 10 years or so. Your lender should explain when and how this occurs.

Interest Only Loan Calculations

You can see how your payments will differ with an interest only loan calculator. Compare the payment on your interest only loan to the payments required for an amortizing loan :

An interest only loan may be right for you. Just make sure you understand the pitfalls before you decide to pay interest only. Choosing an interest only loan for the sole purpose of buying a more expensive home is not a good idea.



Pros and Cons of a Credit Card Consolidation Loan #loans #for #military


#credit card consolidation loan
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Pros and Cons of a Credit Card Consolidation Loan

If you re one of the millions of Americans with overwhelming credit card debt, you may have looked into a credit card consolidation loan to tackle your debt. And while a consolidation loan for credit cards can be a good option when you have a lot of bills to pay off, there are plenty of alternatives to consider. Each has its own pros and cons.

In addition to consolidation loans for credit cards, some of the most popular methods to pay off bills include:

In addition to those, you may want to consider either a Debt Management Plan (DMP) or Debt Settlement Plan (DSP). both of which can help you get out of debt now and develop strong money management skills for the future.

Review your current financial picture and goals with a financial advisor or specialist certified credit counselor to determine the best plan for your needs. Before you do, let s take a look at the pros and cons of each option.

Credit Card Consolidation Loans

With a credit card consolidation loan, you work with a lender to combine all of your unsecured debt into one monthly payment. The lender will pay off your credit card bills, and in exchange you ll enter into a loan agreement with the lender to pay back the money. For a credit card consolidation loan to be worth your while, you ll want a plan that offers a lower interest rate and/or lower monthly payments than you re currently paying to your creditors.

Paying Down Debt on Your Own

As an alternative to a credit card consolidation loan, you can work with your creditors and your budget to develop a plan to wipe out debt on your own. You might pay down your debts through a balance transfer or interest rate negotiation. Both put the control in your hands, which can be good or bad, depending on how disciplined you are. Remember, you ll need to not only put together a budget, but stick to it as well.

With a balance transfer, you ll move credit card debt from all cards onto one existing or new credit card ideally one with an introductory, interest-free or low interest rate offer. You can search for the best offers online or review offers you may have received in the mail.

On the other hand, an interest rate negotiation is an agreement with your creditors to lower the interest rate on your credit cards. You ll contact each of your creditors to request better rates on your open accounts. It s helpful to mention competing offers or plans that you ll consider if your creditors don t seem willing to work with you.

Alternatives to Credit Card Consolidation Loans and Other Plans

As with any financial goal, whether you choose a credit card consolidation loan or other payoff method depends largely on your current financial situation, including your existing debts, whether you can afford your current monthly payments, the interest rates you re now paying to your creditors, and how quickly you d like to pay off your bills.

Providers of CareOne Debt Relief Services offer two additional options that may be beneficial if you re looking to consolidate credit card debt and pay off bills.

A CareOne Debt Management Plan (DMP) helps you pay off debts by consolidating your bills into one simple, monthly payment often with a lower interest rate than you re currently paying to your existing creditors. The DMP includes comprehensive debt counseling, customer service, and financial education all designed to teach you smart money management skills to help you stay debt-free for life.

With a Debt Settlement Plan (DSP). CareOne will negotiate with your creditors to pay back a portion of your existing debt. This is a good option if you have more debt than you can pay down. It s important to note, however, that a DSP will have a negative impact on your credit. As with the DMP, you ll also receive financial education to help you get and stay out of debt for the long term.

Learn more about debt relief plans offered by CareOne. Visit the CareOne community forums where consumers facing similar challenges as you share their experiences with credit card consolidation loans and other plans.

If you liked this you may also like:

A debt consolidation loan can be a great tool for people with bad credit to help them get their finances back on track. By combining your existing bills into one new, monthly payment, you’ll be able to pay off most of your debts and work on becoming debt-free for the long term. But if you’re one of the many consumers with bad credit, you may be wondering whether you even qualify for a consolidation loan.

Because of the economy, millions of people across the country are looking for debt help. If you’re one of those millions, you may be facing overdue loans, calls from debt collectors, and increasing late fees and interest rates. In many cases, the best way to get rid of these debt problems is to work with professional debt-relief provider.

Nobody enjoys paying bills, but if every mail delivery brings more demands for money, the bills are mounting up in a pile, and you’re juggling the debt you already owe with new expenses arriving every day, it’s time to take control and reassess your approach to paying bills.

If you’re struggling with debt – as many consumers are – you may be looking for a way to pay off your bills and get back on track financially. Debt consolidation loans for bad credit profiles are one way to get out of debt, but you may be wondering where to look if you’ve been turned down by your bank or credit union. Before you go down the wrong road, take some time to realize there are choices for you, regardless of your credit history and financial situation

Making the decision to consolidate your bills with a debt relief plan shouldn t be taken lightly. Despite the proliferation of ads marketing the benefits of bill consolidation, many consumers find that they re able to save time and money by paying off their debts on their own. However, if you re in over your head, a bill consolidation program is one option that can help you get out of debt and plan for your financial future.

Begin our online process to see your personalized savings.



Construction Loan Pros, Cons #cash #loans #today


#construction loan rates
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Construction loan has more cons than pros

Dear Real Estate Adviser,

I want to build a new home, and the builder wants me to get a construction loan. I don’t fully understand what that is. Can you tell me the pros and cons of this type of loan.

Dear Diane,

It’s the type of loan that is most convenient for the builder — but not always for the buyer. You would finance the cost to construct the house rather than buying a house that’s already been constructed by the builder. These are often called “story loans” because your lender will want to get a very thorough construction-plan narrative and timeline before it will approve funding. Lenders are not a big fan of fiction, by the way.

But such construction loans can be tough to acquire for individuals these days. For peace of mind, I’d put the onus on the builder and ask him to carry the loan. That way, the contractor or design-build firm gets your design, you OK it, he builds it and you don’t have to take possession until it’s completed to your satisfaction. The builder is more motivated to finish work on time this way.

Either way, make sure your builder checks out. Ask for references, check with the attorney general’s office, obtain a credit report, and check for lawsuits and outstanding liens. One home inspector friend of mine says you should go to city hall and check with a few customers not listed as references. Their names will appear on building permits.

If your builder won’t agree to handle the loan and you decide to carry it, here is what will happen. Funds are typically disbursed in stages as the project progresses, a process that can be a hassle for an individual. You will be required to make only interest payments during construction, which will probably be at a higher rate than the rate on your permanent mortgage — a home loan that will kick in only after the project is completed.

You will want to get the place livable and exit from the construction-loan phase as soon as possible. Many lenders require that a certificate of occupancy be issued before they will finance the permanent loan. Lenders typically allow for overruns and changes as construction progresses via a reserve account. Unused overages are simply credited back after the house is finished, while outstanding shortages are added to the loan balance.

Beware! Anything not in the initial contract will cost you extra. Builders are always looking for add-ons and their ensuing markups, which are huge profit centers for them.

You should know that one of the most common complaints we hear about new-home construction is that construction typically takes longer than planned and usually comes in over budget. If you obtain the construction loan, I suggest you structure your contract to call for a late-completion penalty that the builder would pay by assuming a chunk of your interest payments.

Do your homework and negotiate everything. And be ready, by the way, to show up at the construction site at every major phase of construction to make sure you are getting everything you paid for.

Good luck!

Get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter .



The Pros and Cons of Taking Out a Thrift Savings Plan Loan #loans #canada


#tsp loan
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The Pros and Cons of Taking Out a Thrift Savings Plan Loan

By Michael Roberts. Government Careers Expert

Michael Roberts is a career government employee with service in state and municipal government. Read more

One of the three primary methods employees under the Federal Employees Retirement System use to save for retirement is the Thrift Savings Plan. This plan functions much like a 401(k) offered through private investment companies and employers. The other two primary methods federal employees use for retirement are a pension and Social Security .

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However, the US Office of Personnel Management allows federal workers to withdraw money before retirement following plan provisions. OPM administers the Thrift Savings Plan.

One way to withdraw money from the Thrift Savings Plan is a loan. The two types of Thrift Savings Plan loans are general purpose loans and loans for the purchase or construction of a primary residence.

While there are advantages and disadvantages to taking out a Thrift Savings Plan loan, the disadvantages far outweigh the advantages to such an extent that OPM advises federal employees to exhaust all other loan options before borrowing from their Thrift Savings Plan accounts.

That said, outlined below are the pros and cons of taking out a Thrift Savings Plan loan.

The positive aspects of taking out a Thrift Savings Plan loan are the following:

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The negative aspects of taking out a Thrift Savings Plan loan are the following:



Conventional Loans: Pros and Cons #refinance #student #loans


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Conventional Loans: Pros and Cons

A conventional loan is any mortgage which is not guaranteed or insured by the federal government. Conventional loans were the first traditional mortgage loans made by local lenders. The loans were held in the lender’s investment portfolio until they were either paid in full or foreclosed upon. Although it enabled the borrower to build a business relationship with the lender, this practice was generally not in the lender’s best financial interest. When rates rose, lenders found themselves in the position of receiving below-market interest on their loans, in addition to not being able to recycle the funds to lend to other borrowers.

With the advent of the secondary market in the late 1930s, lenders could assemble and sell their loan packages, thereby bringing funds back to be loaned out to other borrowers. Today, although some lenders still keep loans in portfolio, the overwhelming majority sell them to the secondary market.

There are a number of advantages that conventional loans could present to prospective borrowers, some of which are listed here:

However, conventional loans may also pose some disadvantages, including:

  • Origination fees and other costs are also determined by individual lenders and may therefore be higher than those of other programs.
  • Because mortgage documents for conventional loans can vary by state and even by lender, the lender could specify that certain clauses be included in a mortgage contract; for example, alienation (due-on-sale), prepayment penalty . or acceleration clauses.
  • Loans with greater than an 80 percent loan-to-value (LTV) ratio will require the borrower to purchase Private Mortgage Insurance.
  • Some lenders may require that the borrower pay nonrefundable application or processing fees at the time of loan application.
  • The lender may not allow some creative financing options for the buyer.

    The rules regarding what a lender can and can’t do in conventional mortgage lending is determined by the loan’s ultimate destination. A lender who wants to sell loans to the secondary market has one set of rules that must be adhered to. If the borrowers require PMI, another set of rules have to be applied. Because a majority of all conventional loans are sold to the secondary market, those guidelines have become the general standard for conventional mortgages.



  • Overview of FHA 203k Loans – Pros and Cons #get #a #loan


    #203k loan
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    FHA 203k Basics

    By Justin Pritchard. Banking/Loans Expert

    Justin Pritchard helps consumers navigate the world of banking.

    FHA 203k Basics

    Instead of getting two loans, you bundle everything together.

    Advantages and Disadvantages

    There are a few reasons to look at FHA 203k. The loan may reduce costs and paperwork because you only get one loan (as opposed to a home loan and a home improvement loan). Rates are competitive, and you can buy a home that banks might otherwise not provide funding for.

    However, there are always tradeoffs. An FHA 203k loan takes longer to close, which may not be acceptable to home sellers (or you).

    There are a few more hoops to jump through due to the improvement projects, and you may be required to fix things you didn’t intend to fix to get FHA 203k approval.

    As with any loan, there are costs and restrictions, and FHA 203k has its own unique set. You should expect closing to take 45 to 90 days.

    How FHA 203k Works

    The loan can pay for a home as well as eligible improvements. FHA 203k is designed for one to four unit properties, but condo and townhome owners can use the program for interior projects.

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    The maximum loan depends on location. and FHA 203k allows up to 110% of the home’s projected value after improvement. The minimum loan is $5,000. However, the Streamlined FHA 203k allows you to do smaller projects (with an easier process). Funds for improvement projects go to an escrow account and are paid out as work is completed.

    Work must be finished within 6 months of closing. There is a little extra padding in case projects cost more than expected, but you cannot borrow more through FHA 203k after you’ve used the excess. Work with a reputable contractor who provides accurate estimates.

    Loans may be fixed rate or adjustable rate mortgages with 15 or 30 year terms, and rates are slightly higher than traditional FHA loans. FHA 203k is not available to investors, but owner/occupants and nonprofits can use them.



    What Is Mortgage Payment Protection Insurance – Pros – Cons #poor #credit


    #loan protection insurance
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    What Is Mortgage Payment Protection Insurance Pros Cons

    By Chris Bibey

    If you have a mortgage on your home, chances are you ve gotten plenty of offers for mortgage protection insurance. For example, shortly after I signed the papers for my new home, I started receiving mailers with information on mortgage protection insurance. It has now been more than a year, and I am still receiving these offers.

    When you re inundated with these mailers, it s difficult to know what to take seriously and what to throw out as junk mail. Plus, why does anyone need mortgage protection insurance anyway? Answering these basic questions will help you the next time you see an offer in your mailbox.

    What Is Mortgage Protection Insurance?

    Generally speaking, mortgage protection insurance will cover some or all of your monthly mortgage bill in the event that you lose your job or become disabled, for various lengths of time. Most of these policies will also pay off your entire loan should you pass away. Policies can differ greatly from one agency to another, so you need to know what a given policy offers for the price.

    Often, you ll have the option to purchase mortgage protection insurance from your lender. You don t always have to take them up on the offer, however, since you can also obtain mortgage protection through most insurance agencies and other independent sellers. Shop around because different agencies will have different coverage options and prices.

    The cost of mortgage protection insurance varies from person to person, and as with life insurance. your rate is based on your age and health, as well as the current value of your home, the amount of your regular payment, and the current payoff amount of the mortgage. With policies that make monthly payments in the event of a disability, your cost will vary greatly based upon the industry in which you work. A roofer, for example, is at a higher risk of disability than an accountant.

    If you purchase mortgage protection insurance that pays off your loan in the event of your death, your insurance company will send a check directly to your lender for the current payoff amount on your mortgage. In turn, your heirs won t have to deal with a home that has a mortgage attached to it. If your insurance covers disability or job loss, they may not cover your entire mortgage payment. Instead, they ll cover a certain amount that s specified in your contract.

    Mortgage protection insurance is not the same thing as private mortgage insurance, which goes to the lender if you default on your mortgage, and doesn t have a specific benefit for you the borrower. Mortgage protection insurance, however, protects you as a borrower. Although many lenders offer the insurance, it s not built to protect them.

    Benefits of Mortgage Protection Insurance

    1. Very high acceptance rates. There are very few reasons why an insurance provider would turn you down for mortgage protection insurance. While many people are counting on their life or disability insurance to cover these costs, some people have trouble getting life insurance because of their age or pre-existing medical conditions. If you re in this scenario, then mortgage protection insurance can be your best option to protect your family s standard of living.
    2. Peace of mind. As with any insurance policy, you never really know if you will ever use the insurance. But the safety net of insurance provides peace of mind. Some people go to work every day wondering what will happen to their home if they lose their job or become disabled. With the right mortgage protection insurance, you don t have to stress and you ll know that your payments will be made.

    Drawbacks

    1. Maximum payment limitations. If you lose your job, your policy will not provide a sum of money equal to your normal monthly wages. Instead, how much you receive will be defined in your contract policy as a set amount or percentage. This may not seem entirely fair at first, but insurance companies place this limit to motivate a quick return to work.
    2. Balancing your budget. If you have a very low mortgage payment, mortgage protection insurance may not be worth the commitment for you. Conservative investing in an emergency fund can give you enough of a cushion to make your monthly payments during unemployment or a disability. Maintaining an emergency fund  about 3-6 months salary is your way to make sure you can stay up to date on your payments without surrendering the monthly premium to an insurance company.
    3. Declining value over time. If you take out a $200,000 life insurance policy and keep paying your premiums, your heirs will receive $200,000, regardless of when you pass away. Mortgage protection insurance, however, only covers the payoff amount on your mortgage, which goes down as you keep paying it every month. That means if you ve owned your home for 20 years, and you originally had a payoff amount of $200,000, your payoff amount will have declined significantly by now. Despite that falling payoff amount, you ll still probably be paying the same premium on your mortgage protection insurance.

    Alternatives to Mortgage Insurance

    Many people use mortgage protection insurance in place of or along with traditional life insurance or disability insurance. If you can get approved with a good rate for either of these products, you can count on having that money in case of disability or death as long as you are able to maintain your premium payments.

    Few agencies, however, will offer job-loss insurance, and some mortgage protection insurance plans will cover some or all of your mortgage payments if you lose your job. You can also focus on beefing up your emergency fund so you ll be able to cover several months worth of mortgage payments in case you become disabled or lose your job.

    Final Word

    If you have a risky job or health concerns that make life insurance or disability insurance difficult to obtain, you should look into your options in mortgage protection insurance policies. Make sure you take the time to shop around before making a final decision you need to know the details of the policy before you commit. Questions to ask include what the policy covers, the monthly cost, the payout you can expect, when the policy would pay out, and any other features that are important to you and your family.

    Have you used mortgage protection insurance? How did it work out for you? If you don t carry mortgage protection insurance, what s your backup plan?



    Pros and cons of private-mortgage loans. #www.loan.com


    #private loans
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    Pros and cons of private-mortgage loans

    By HSH.com. September 13, 2013, 10:02:00 AM EDT

    The problem for most borrowers in recent years hasn’t been low mortgage rates. it has been the strict lending requirements imposed by most lenders. If you’re having trouble qualifying for a conventional mortgage, a private-mortgage lender may be an option.

    Private money funds, also known as “hard money,” usually come from private investors or private lending companies who are willing to loan homebuyers money to purchase a specific property, says Jared Martin, chief executive officer of Keystone Funding, Inc. in Media, Pa.

    Homebuyers can often find these lenders by joining a real estate investment club in their area, Martin says, but these loans are most often secured by home investors. Unfortunately, not every homeowner will be successful getting money from a private lender.

    Here are the pros and cons regarding private mortgage loans:

    Pro: Easy to qualify

    The loans could be a great option for homebuyers who are not able to qualify for a traditional mortgage because of less-than-perfect credit, debt or for self-employed individuals who can’t always provide proof of a steady income, Martin says.

    “The underwriting of the hard money loan is not so ‘person’ focused as it is ‘property’ focused,” says Brian Frederick, a certified financial planner who advises real estate investors in Scottsdale, Ariz. “A person with poor credit can get a hard money loan if the project shows a likely profit.”

    Con: Short payback period

    Private loans aren’t paid back over 30 years like a traditional mortgage. Many private-money lenders expect the loan to be repaid within an extremely short time period, such as six to 12 months, says Martin, though “it could occasionally go to two years,” he says.

    Private lenders are often looking for a quick return for their money, and they usually aren’t set up to service a loan for several years the way a typical mortgage company is, he says.

    For this reason alone, most homebuyers should look elsewhere for mortgages, says Jeff Curtis, a Realtor and director of mentoring at Keller Williams in Pasadena.

    Pro: Great for ‘flippers’

    However, you might consider such a short repayment period if you plan to sell or “flip” the house within that timeframe, or expect to be able to qualify for a conventional refinance within a few months after acquiring the property, Curtis says.

    If you plan to make extensive renovations in a short time period that will boost the value of the home, it is possible that you could sell or refinance the property fairly quickly, he says.

    Pro: Geared toward ‘fixer-upper’ properties

    Homes that need extensive renovations generally can’t qualify for conventional mortgages, no matter how good the borrower’s credit is, says Frederick. In those cases, private money can play an important role, he says.

    “Some vacant homes may have been vandalized or someone may have stolen the plumbing,” he says. A private lender could step in and provide financing to get the house in sellable condition, and then “flip” the house, says Frederick.

    Con: High interest rates

    Interest rates are much higher with private-money lending than with conventional loans, Curtis says. In fact, mortgage rates are sometimes more than double typical 30-year mortgage rates, often 12 to 20 percent per year, he says.

    Mortgage rates are so high because private lenders don’t usually require perfect credit. “Loans from private lenders are generally secured by the property in question, so it’s usually not as important to the lender if the borrower has pristine credit or not,” Curtis says.

    Pro: Short approval process

    If you have a house that you believe is a candidate for a private loan, the approval process often takes just a couple of weeks, as opposed to 30 to 45 days for a conventional loan, Frederick says.

    For many borrowers, getting a loan that quick is a good tradeoff for higher interest rates. “Private money lenders don’t require a long drawn-out loan process like a conventional mortgage does,” Frederick says.

    If you have a house you want to rehab, and you feel that you could improve it enough to boost its worth in a short period of time that would allow you to pay off a private loan and replace it with a conventional refinance or sale, then getting a private loan is a viable option, says Frederick.

    As long as you understand the caveats and do your research, it is possible to successfully secure a property without a conventional loan.



    Pros and Cons of a Credit Card Consolidation Loan #student #loan #application


    #credit card consolidation loan
    #

    Pros and Cons of a Credit Card Consolidation Loan

    If you re one of the millions of Americans with overwhelming credit card debt, you may have looked into a credit card consolidation loan to tackle your debt. And while a consolidation loan for credit cards can be a good option when you have a lot of bills to pay off, there are plenty of alternatives to consider. Each has its own pros and cons.

    In addition to consolidation loans for credit cards, some of the most popular methods to pay off bills include:

    In addition to those, you may want to consider either a Debt Management Plan (DMP) or Debt Settlement Plan (DSP). both of which can help you get out of debt now and develop strong money management skills for the future.

    Review your current financial picture and goals with a financial advisor or specialist certified credit counselor to determine the best plan for your needs. Before you do, let s take a look at the pros and cons of each option.

    Credit Card Consolidation Loans

    With a credit card consolidation loan, you work with a lender to combine all of your unsecured debt into one monthly payment. The lender will pay off your credit card bills, and in exchange you ll enter into a loan agreement with the lender to pay back the money. For a credit card consolidation loan to be worth your while, you ll want a plan that offers a lower interest rate and/or lower monthly payments than you re currently paying to your creditors.

    Paying Down Debt on Your Own

    As an alternative to a credit card consolidation loan, you can work with your creditors and your budget to develop a plan to wipe out debt on your own. You might pay down your debts through a balance transfer or interest rate negotiation. Both put the control in your hands, which can be good or bad, depending on how disciplined you are. Remember, you ll need to not only put together a budget, but stick to it as well.

    With a balance transfer, you ll move credit card debt from all cards onto one existing or new credit card ideally one with an introductory, interest-free or low interest rate offer. You can search for the best offers online or review offers you may have received in the mail.

    On the other hand, an interest rate negotiation is an agreement with your creditors to lower the interest rate on your credit cards. You ll contact each of your creditors to request better rates on your open accounts. It s helpful to mention competing offers or plans that you ll consider if your creditors don t seem willing to work with you.

    Alternatives to Credit Card Consolidation Loans and Other Plans

    As with any financial goal, whether you choose a credit card consolidation loan or other payoff method depends largely on your current financial situation, including your existing debts, whether you can afford your current monthly payments, the interest rates you re now paying to your creditors, and how quickly you d like to pay off your bills.

    Providers of CareOne Debt Relief Services offer two additional options that may be beneficial if you re looking to consolidate credit card debt and pay off bills.

    A CareOne Debt Management Plan (DMP) helps you pay off debts by consolidating your bills into one simple, monthly payment often with a lower interest rate than you re currently paying to your existing creditors. The DMP includes comprehensive debt counseling, customer service, and financial education all designed to teach you smart money management skills to help you stay debt-free for life.

    With a Debt Settlement Plan (DSP). CareOne will negotiate with your creditors to pay back a portion of your existing debt. This is a good option if you have more debt than you can pay down. It s important to note, however, that a DSP will have a negative impact on your credit. As with the DMP, you ll also receive financial education to help you get and stay out of debt for the long term.

    Learn more about debt relief plans offered by CareOne. Visit the CareOne community forums where consumers facing similar challenges as you share their experiences with credit card consolidation loans and other plans.

    If you liked this you may also like:

    A debt consolidation loan can be a great tool for people with bad credit to help them get their finances back on track. By combining your existing bills into one new, monthly payment, you’ll be able to pay off most of your debts and work on becoming debt-free for the long term. But if you’re one of the many consumers with bad credit, you may be wondering whether you even qualify for a consolidation loan.

    Because of the economy, millions of people across the country are looking for debt help. If you’re one of those millions, you may be facing overdue loans, calls from debt collectors, and increasing late fees and interest rates. In many cases, the best way to get rid of these debt problems is to work with professional debt-relief provider.

    Nobody enjoys paying bills, but if every mail delivery brings more demands for money, the bills are mounting up in a pile, and you’re juggling the debt you already owe with new expenses arriving every day, it’s time to take control and reassess your approach to paying bills.

    If you’re struggling with debt – as many consumers are – you may be looking for a way to pay off your bills and get back on track financially. Debt consolidation loans for bad credit profiles are one way to get out of debt, but you may be wondering where to look if you’ve been turned down by your bank or credit union. Before you go down the wrong road, take some time to realize there are choices for you, regardless of your credit history and financial situation

    Making the decision to consolidate your bills with a debt relief plan shouldn t be taken lightly. Despite the proliferation of ads marketing the benefits of bill consolidation, many consumers find that they re able to save time and money by paying off their debts on their own. However, if you re in over your head, a bill consolidation program is one option that can help you get out of debt and plan for your financial future.

    Begin our online process to see your personalized savings.



    Personal Loan Pros #wonga #loans


    #best payday loan
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    Quick Easy Personal Loans for All Types of Credit

    We understand that people from all walks of life, at one point or another, face financial hardships. During these financial hardships are when people need the most help in finding a solution to their problem. That s where we come in. We help consumers find unsecured personal loans even if they have bad credit or been declined by the big banks. There are several types of personal loans, but the type of loan you qualify for depends on your situation, such as residence, income, credit and how quickly you need the money.

    Loan Types Available:

    Each type of loan has its pros and cons. Please read the description for each loan type below and see which one makes sense for you.

    Payday loans  are one of the most expensive ways to borrow money. These loans are intended for short-term emergency cash. Qualifying for a payday loan is easy, and it s one of the reasons why so many people use them. There are no credit checks and the application process is fast. An online application can take less than 5 minutes to fill out, while a trip to the local payday loan store may take 30 minutes to an hour, depending on how far you are from the store and how long the lines are. You can get your money the same day in-store, or overnight if you apply online. We recommend applying online for several reasons .

    Installment loans carry lower interest rates, higher loan amounts ($2,000-35,000) and longer repayment terms. However, qualifying for an installment loan may be slightly more difficult than qualifying for a payday loan. For example, an installment loan may require better credit and a higher income compared to a payday loan. The funding speed for installment loans vary from lender to lender, but typically you can get your loan deposited to your bank account in a couple of business days.

    Peer-to-peer loans have been around for quite some time, but many people still have not heard of it. Peer-to-peer loans are provided through a handful of peer-to-peer lending platforms. These lending platforms allow you to borrow considerable amounts of money from a group of investors at interest rates that are significantly lower than a payday or installment loan. In order to qualify for a peer-to-peer loan, you will need fair credit or better. Funding for peer-to-peer loans may take a few days to a week, so if you re looking for an overnight loan, this isn t it.

    Military loans are personal loans that conform to the lending laws set forth by the Military Lending Act of 2006. This law makes it illegal for payday lenders to offer loans to members of the military, as well as providing certain protections and benefits. If you are an active member of the military, you should definitely consider a military loan  if you have less than perfect credit.

    Tribal loans are offered by Native American tribal lenders and generally carry the highest fees out of all personal loan types. These types of lenders are federally recognized entities, but they do not typically operate according to state laws. For this reason, you may find that tribal lenders often times go beyond the limits of many state laws, and this may include extremely high interest rates and loan amounts that exceed state law limitations. We do not recommend using tribal loans because they are deemed by many to be illegal. However, they are listed here for your reference.

    Now that you have a basic understanding of each loan type, you can begin your search for a lender. Be sure to read the fine print and understand the terms of the loan before applying.



    Student Loan Consolidation: Pros and Cons – The Simple Dollar #cheapest #loan


    #school loan consolidation
    #

    Student Loan Consolidation: Pros and Cons

    Combining all of your student loans into one may not taste as good as one-pot chili, but it could make your monthly payment easier to swallow. Photo: Jo

    Graduating from college comes with the acknowledgement of great achievement and, if you re like 70% of graduates, a burden on your back in the form of student loan debt.

    The average college grad leaves school with $40,000 worth of debt. But if you switched majors, transferred colleges, or went on to graduate school, you may be among the 19% that owe $50,000 and above, or the 5.6% who owe more than $100,000.

    Chances are if you re dealing with student loan debt. you re not just dealing with one loan. Each semester, you may have taken out a new loan. And if you couldn t cover the costs with federal loans, you very well may have turned to a private lender, such as a bank or other lending institution (e.g. Sallie Mae) to fund the rest of your expenses.

    One option you have when you begin tackling your student loan debt is to explore loan consolidation. But before you head down that road, here s what you should know.

    What is Student Loan Consolidation?

    If, like many college graduates, you have multiple student loans, you ve probably heard the term student loan consolidation thrown around more than once when talking about repayment options. Simply put, this is the process of combining your multiple student loans into a single, bigger loan, possibly with a new lender. 

    You’ll no longer owe the original loans, and since this consolidated loan is new, it will come with a new interest rate, a new payment policy, and new terms and conditions.

    There are both benefits and drawbacks to consolidating your loans, which we ll discuss in this article. Choosing to consolidate your loans is an individual choice and the right decision will depend on the specifics of your loans the types of loans, interest rates, balances, borrower benefits, and more as well as your current financial situation.

    Pros and Cons of Loan Consolidation

    It s important to remember that there are different types of loans most significantly, there s a big difference between federal loans (those issued by the U.S. government) and private loans (those issued by a bank, credit union, or other lending institution).

    Each has its own pros and cons, which we ll get into in a little bit. But in general, here are some of the benefits and potential drawbacks when considering student loan consolidation.

    Pros of Student Loan Consolidation

    Cons of Student Loan Consolidation

    Consolidating Federal Loans

    Hopefully, you tried to take advantage of financial aid in college   specifically, federal student loans   before turning to private loans, which often carry a higher interest rate and come with fewer borrower benefits.

    If you did, you may want to learn how to specifically consolidate these federal loans. The Direct Consolidation Loan allows you to consolidate multiple federal student loans into one.



    How Do FHA Loans Work? (Pros and Cons) #loan #calculator #free


    #what is fha loan
    #

    FHA Loan Basics

    By Justin Pritchard. Banking/Loans Expert

    Justin Pritchard helps consumers navigate the world of banking.

    Loans from the Federal Housing Administration (FHA) are popular options for borrowers because they allow you to buy a home with a relatively small down payment. Designed to promote home ownership, FHA loans make it easier for people to qualify for a mortgage. But they’re not for everybody, so it pays to understand how they work and when they work best

    What is an FHA Loan?

    In other words, the offers a guarantee to your bank: if you fail to repay the mortgage, FHA will step up and repay the bank instead. Because of this guarantee, lenders are willing to make large mortgage loans in cases when they’d otherwise be unwilling approve loan applications The FHA, an agency of the United States government, has plenty of dough to deliver on that promise.

    Why are They so Great?

    FHA loans are not perfect, but they are a great fit in some situations. The main appeal is that they make it easy to buy property, but don’t forget that those benefits always come with tradeoffs.

    Here are some of the most attractive features:

    Down payment: FHA loans allow you to buy a home with a down payment as small as 3.5%. Other loan programs generally require a much larger down payment.

    Other peoples’ money: it’s easier to use gifts for down payment and closing costs. In addition, sellers can pay up to 6% of the loan amount towards a buyer’s closing costs. You’re most likely to benefit from that in a buyer’s market, but those do come around from time to time.

    Continue Reading Below

    Assumable: a buyer can “take over” your FHA loan if it’s assumable. That means they’ll pick up where you left off – benefiting from lower interest costs (because you’ve already gone through the highest-interest years). Depending whether or not have changed by the time you sell, the buyer might also enjoy a low interest rate that’s unavailable elsewhere.

    A chance to reset: If you’ve recently come out of bankruptcy or foreclosure, it’s easier to get an FHA loan than a loan that does not come with any government guarantee (two or three years after financial hardship is enough to qualify with FHA).

    Home improvement: certain FHA loans can be used to pay for home improvement (through FHA 203k programs)

    Qualification: it’s easier to qualify for an FHA loan.

    How do you Qualify for an FHA Loan?

    The FHA makes it relatively easy to qualify for a loan. Again, the government guarantees the loan, so lenders are more willing to approve loans. However, lenders can (and do) set standards that are stricter than FHA requirements. If you’re having trouble with one FHA approved lender, you might have better luck with another.

    Note: you never know until you apply. Even if you think you won’t qualify after reading this page, talk with an FHA approved lender to find out for sure.

    Income limits: there are none. You’ll need enough to show that you can repay the loan (see below) but these loans are geared towards lower income borrowers. If you’re fortunate enough to have a high income, you aren’t disqualified like you might be with certain first time home buyer programs.

    Debt to income ratios : to qualify for an FHA loan, you’ll need to have reasonable debt to income ratios. That means that the amount you spend on monthly payments needs to be “reasonable” when compared to your monthly income. In general, you have to be better than 31/43, but in some cases it’s possible to get approved with D/I ratios closer to 55%.

    Example: assume you earn $3,500 per month. To meet the requirements, it is best to keep your monthly housing payments below $1,225 (because $1,225 is 31% of $3,500). If you have other debts (such as credit card debt ), all of your monthly payments combined should be less than $1,505.

    To figure out how much you might spend on a mortgage payment. use our online calculator .

    Credit score: borrowers with low credit scores are more likely to get approved if they apply for an FHA loan. Scores can go as low as 580 if you want to make a 3.5% down payment. If you’re willing and able to make a larger down payment, your score can potentially be lower still.

    Loan amount : there are limits on how much you can borrow. In general, you’re limited to modest loan amounts relative to home prices in your area. To find the limits in your region, visit HUD’s Website .

    How do FHA Loans Work?

    The FHA promises to pay lenders if a borrower defaults on an FHA loan. To fund this obligation, the FHA charges borrowers a fee. Home buyers who use FHA loans pay an upfront mortgage insurance premium (MIP) of 1.75%. They also pay a modest ongoing fee with each monthly payment.

    If a borrower defaults on an FHA loan, the FHA uses those collected insurance premiums to compensate the bank.

    Why Not Use an FHA Loan?

    While they come with appealing features, you may find that FHA loans are not for you. They may not provide enough money if you need a large loan. But the main drawback is that the upfront mortgage insurance premium (and ongoing premiums) can cost more than private mortgage insurance would cost.

    In some cases, you can still buy a house with a very little down using a standard loan (not an FHA loan). Especially if you’ve got good credit. you might find competitive offers that beat FHA loans.

    As always, you should compare offers from several different lenders – including FHA loans and conventional loans – before you agree to anything.



    Debt Consolidation: Pros and Cons #student #car #loans


    #unsecured debt consolidation loans
    #

    If you are considering debt consolidation, understand the advantages and disadvantages.

    Whether you are teetering on the edge of bankruptcy or just trying to better manage your finances, you can’t help but notice all the advertisements touting debt consolidation. But is debt consolidation a good option for you?

    Read on to learn about the different debt consolidation options and the pros and cons of each.

    (To learn about other ways to handle debt, see our Debt Management  topic area.)

    What Is Debt Consolidation?

    With debt consolidation, you get a single loan to pay off all of your smaller loans, thereby leaving you with just one monthly payment rather than several. The theory is that one payment will be easier to manage. The goal is to lower the interest rate and the monthly payment while paying off your debt more quickly.

    Debt consolidation is not the same as debt settlement. In debt consolidation, you pay your debt in full with no negative consequences to your credit.

    Secured vs. Unsecured Loans

    When you take out a secured loan, such as a mortgage or a car loan, you pledge certain property, such as your home or your car, to secure the repayment of the loan. For example, when you obtain a mortgage loan, your house is security for repayment. If you fall behind, the mortgage holder can foreclose on your house to satisfy the loan.

    Unsecured loans are based only on your promise to pay and are not secured by any property that can be foreclosed or repossessed to pay the loan. Credit cards are examples of unsecured loans. Unsecured loans usually have a higher interest rate because they carry more risk for the lender.

    Debt Consolidation Through Secured Loans

    There are many options for debt consolidation using secured loans. You can refinance your house, take out a second mortgage, or get a home equity line of credit. You can take out a car loan, using your automobile as collateral. You can also use other assets as security for a loan. A 401K loan uses your retirement fund as collateral. If you have a life insurance policy with cash value, you may be able to obtain a loan against the policy. A variety of financing firms will also loan you money against lawsuit claims, lottery winnings, and annuities.

    Any of these could be used for debt consolidation. But are they the right option for you?

    Pros of Consolidating With a Secured Loan

    Often, secured loans carry lower interest rates than unsecured loans so they may save your money on interest payments. Lower interest rates will likely make the monthly payment lower and more affordable. Sometimes, the interest payments are even tax deductible. For example, in many instances interest paid on loans secured by real estate is allowed as a tax deduction.

    A single monthly payment with a lower interest rate is likely to ease your financial burden substantially. Also, secured loans are generally easier to obtain because they carry less risk for the lender.

    Cons of Consolidating With a Secured Loan

    there is a huge downside to consolidating unsecured loans into one secured loan: When you pledge assets as collateral, you are putting the pledged property at risk. If you can’t pay the loan back, you could lose your house, car, life insurance, retirement fund, or whatever else you might have used to secure the loan. Certain assets, such as life insurance or retirement funds may not be available to you if the loan is not paid back before you need to use them.

    The term of a secured loan may also be longer than the term of the debt obligations that you consolidated. This could cause the total interest that you pay over the life of the consolidation loan to be greater than the interest would have been on the individual debts, even though the monthly payment is lower.

    Debt Consolidation Through Unsecured Loans

    While unsecured personal debt consolidation loans used to be quite common, they are less likely to be available to people who need them today. Generally, an unsecured loan will require the borrower to have very good credit. Accepting a no interest, or low interest, introductory rate on a credit card is often used as a substitute for an unsecured personal loan for debt consolidation.

    Pros of Consolidating With an Unsecured Loan

    The biggest benefit to an unsecured debt consolidation loan is that no property is at risk. And, while the interest rate may be higher than a secured loan, it may be less than is charged on several different credit card balances, thereby lowering your interest burden and your payment.

    Cons of Consolidating With an Unsecured Loan

    An unsecured debt consolidation loan may be hard to get if you don’t have sterling credit. Most people who need debt consolidation loans may not qualify. Also, interest rates are generally higher than secured loans. This may result in a payment that is not low enough to make a difference in your financial situation.

    Using balance transfer options on no-interest or low-interest credit card offers are tricky. Often, there is a transfer fee in the fine print which negates some of the savings. There are also rules which may diminish the benefits. If you use the card for anything else, the other charges may generate interest while payments are applied first to the no-interest balance. Also, the no-interest or low-interest period is generally limited. If you can’t pay the debt off during this time, you might end up paying higher interest once the special offer period runs out.

    The Psychological Pros and Cons of Debt Consolidation

    While the benefit of consolidating your debts into one loan with one lower monthly payment may provide you with a great deal of emotional and financial relief, it may also leave you feeling prematurely confident about your financial situation. This could cause you to let your guard down and incur additional debt before you have paid off the consolidation loan, starting the cycle all over again.



    Construction Loan Pros, Cons #student #loan #interest #rates


    #construction loan rates
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    Construction loan has more cons than pros

    Dear Real Estate Adviser,

    I want to build a new home, and the builder wants me to get a construction loan. I don’t fully understand what that is. Can you tell me the pros and cons of this type of loan.

    Dear Diane,

    It’s the type of loan that is most convenient for the builder — but not always for the buyer. You would finance the cost to construct the house rather than buying a house that’s already been constructed by the builder. These are often called “story loans” because your lender will want to get a very thorough construction-plan narrative and timeline before it will approve funding. Lenders are not a big fan of fiction, by the way.

    But such construction loans can be tough to acquire for individuals these days. For peace of mind, I’d put the onus on the builder and ask him to carry the loan. That way, the contractor or design-build firm gets your design, you OK it, he builds it and you don’t have to take possession until it’s completed to your satisfaction. The builder is more motivated to finish work on time this way.

    Either way, make sure your builder checks out. Ask for references, check with the attorney general’s office, obtain a credit report, and check for lawsuits and outstanding liens. One home inspector friend of mine says you should go to city hall and check with a few customers not listed as references. Their names will appear on building permits.

    If your builder won’t agree to handle the loan and you decide to carry it, here is what will happen. Funds are typically disbursed in stages as the project progresses, a process that can be a hassle for an individual. You will be required to make only interest payments during construction, which will probably be at a higher rate than the rate on your permanent mortgage — a home loan that will kick in only after the project is completed.

    You will want to get the place livable and exit from the construction-loan phase as soon as possible. Many lenders require that a certificate of occupancy be issued before they will finance the permanent loan. Lenders typically allow for overruns and changes as construction progresses via a reserve account. Unused overages are simply credited back after the house is finished, while outstanding shortages are added to the loan balance.

    Beware! Anything not in the initial contract will cost you extra. Builders are always looking for add-ons and their ensuing markups, which are huge profit centers for them.

    You should know that one of the most common complaints we hear about new-home construction is that construction typically takes longer than planned and usually comes in over budget. If you obtain the construction loan, I suggest you structure your contract to call for a late-completion penalty that the builder would pay by assuming a chunk of your interest payments.

    Do your homework and negotiate everything. And be ready, by the way, to show up at the construction site at every major phase of construction to make sure you are getting everything you paid for.

    Good luck!

    Get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter .



    Pros and Cons of Student Loan Consolidation for Federal Loans #payday #loans #for #unemployed


    #federal student loan consolidation
    #

    Pros and Cons of Consolidating Federal Student Loans

    One of the unpleasant side effects of leaving college for students who took out loans, is that lenders fill your mailbox with reminders that you still owe something for that education.

    Federal loans carry a six-month grace period so there is time to develop a plan for dealing with them. Most student borrowers, however, aren’t that lucky. They leave with an average of $30,000 of debt and it is not unusual to owe that money to 8-10 separate lenders and potentially a combination of private and federal loans. Continuing on to graduate school can add another 4-6 lenders to the mix. Each one of these student loans has its own due dates, interest rates and payment amounts. Keeping track of that many payments is complicated and part of the reason that seven million Americans have defaulted on student loans. This is why student loan consolidation appears as such an attractive solution, but there are things you should know as you consider this approach.

    The definition of loan consolidation, in a nutshell, is: One payment, one lender. It’s simple, efficient and practical, but there are some negatives, not the least of which is that you could end up paying much more by the time you’re finished. Here are pros and cons of student loan debt consolidation:

    Pros of Student Loan Consolidation

    Cons of Student Loan Consolidation

    There is no hard and fast rule about student loan consolidation, other than be sure you’re saving money doing so. It almost certainly will cost you more time. Don’t let it cost you more money.



    The Pros & Cons of Consolidating Your Student Loans #bad #credit #loans #no #guarantor


    #student loans
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    The Pros & Cons of Consolidating Your Student Loans



    Pros and Cons of Interest-Free Student Loans – US News #loan #calulator


    #no interest loans
    #

    Pros and Cons of Interest-Free Student Loans

    No-interest loans save students thousands, but involve hassles.

    Student loans that don’t charge any interest—thus saving students thousands of dollars—sound like great deals.

    But while interest-free loans are almost always better deals than private student loans made by banks or credit unions, they typically don’t offer some of the benefits of federal student loans.

    Here are some pros and cons to consider before committing to an interest-free student loan.

    Pros:

    Big savings: Students with no-interest loans pay back exactly the amount they borrowed. That saves thousands of dollars in interest over the long term. Students who borrow the maximum $27,000 from the federal government’s unsubsidized Stafford student loan program for four years’ worth of tuition often end up repaying $10,000 more than they actually borrowed because of added interest. Those who take out private student loans, which can charge higher fees and interest, can pay tens of thousands of dollars worth of interest.

    Helping others: Many of the charities that make interest-free student loans use the monthly repayment checks to fund loans for other students, so your money is directly helping fellow students.

    Cons:

    Applications: Many of the charities require extensive essays or personal interviews. To qualify for federal student loans, students need only fill out the Free Application for Federal Student Aid. which most students have to fill out to apply for other financial aid anyway.

    Co-signers: Some charities require students to find adults with good credit who will promise to repay the money if the students fail to do so. Federal student loans don’t require co-signers.

    Immediate repayment. Some charities require students to start making small monthly payments immediately. Federal student loans waive payments as long as students attend college at least half time.

    No Forgiveness: Graduates who go into public service can have a portion of their federal student debts forgiven after 10 years of payments. Charitable loans don’t qualify for the government’s public service forgiveness.

    Searching for a college? Get our complete rankings of Best Colleges .



    Pros and cons of private-mortgage loans. #unsecured #loan


    #private loans
    #

    Pros and cons of private-mortgage loans

    By HSH.com. September 13, 2013, 10:02:00 AM EDT

    The problem for most borrowers in recent years hasn’t been low mortgage rates. it has been the strict lending requirements imposed by most lenders. If you’re having trouble qualifying for a conventional mortgage, a private-mortgage lender may be an option.

    Private money funds, also known as “hard money,” usually come from private investors or private lending companies who are willing to loan homebuyers money to purchase a specific property, says Jared Martin, chief executive officer of Keystone Funding, Inc. in Media, Pa.

    Homebuyers can often find these lenders by joining a real estate investment club in their area, Martin says, but these loans are most often secured by home investors. Unfortunately, not every homeowner will be successful getting money from a private lender.

    Here are the pros and cons regarding private mortgage loans:

    Pro: Easy to qualify

    The loans could be a great option for homebuyers who are not able to qualify for a traditional mortgage because of less-than-perfect credit, debt or for self-employed individuals who can’t always provide proof of a steady income, Martin says.

    “The underwriting of the hard money loan is not so ‘person’ focused as it is ‘property’ focused,” says Brian Frederick, a certified financial planner who advises real estate investors in Scottsdale, Ariz. “A person with poor credit can get a hard money loan if the project shows a likely profit.”

    Con: Short payback period

    Private loans aren’t paid back over 30 years like a traditional mortgage. Many private-money lenders expect the loan to be repaid within an extremely short time period, such as six to 12 months, says Martin, though “it could occasionally go to two years,” he says.

    Private lenders are often looking for a quick return for their money, and they usually aren’t set up to service a loan for several years the way a typical mortgage company is, he says.

    For this reason alone, most homebuyers should look elsewhere for mortgages, says Jeff Curtis, a Realtor and director of mentoring at Keller Williams in Pasadena.

    Pro: Great for ‘flippers’

    However, you might consider such a short repayment period if you plan to sell or “flip” the house within that timeframe, or expect to be able to qualify for a conventional refinance within a few months after acquiring the property, Curtis says.

    If you plan to make extensive renovations in a short time period that will boost the value of the home, it is possible that you could sell or refinance the property fairly quickly, he says.

    Pro: Geared toward ‘fixer-upper’ properties

    Homes that need extensive renovations generally can’t qualify for conventional mortgages, no matter how good the borrower’s credit is, says Frederick. In those cases, private money can play an important role, he says.

    “Some vacant homes may have been vandalized or someone may have stolen the plumbing,” he says. A private lender could step in and provide financing to get the house in sellable condition, and then “flip” the house, says Frederick.

    Con: High interest rates

    Interest rates are much higher with private-money lending than with conventional loans, Curtis says. In fact, mortgage rates are sometimes more than double typical 30-year mortgage rates, often 12 to 20 percent per year, he says.

    Mortgage rates are so high because private lenders don’t usually require perfect credit. “Loans from private lenders are generally secured by the property in question, so it’s usually not as important to the lender if the borrower has pristine credit or not,” Curtis says.

    Pro: Short approval process

    If you have a house that you believe is a candidate for a private loan, the approval process often takes just a couple of weeks, as opposed to 30 to 45 days for a conventional loan, Frederick says.

    For many borrowers, getting a loan that quick is a good tradeoff for higher interest rates. “Private money lenders don’t require a long drawn-out loan process like a conventional mortgage does,” Frederick says.

    If you have a house you want to rehab, and you feel that you could improve it enough to boost its worth in a short period of time that would allow you to pay off a private loan and replace it with a conventional refinance or sale, then getting a private loan is a viable option, says Frederick.

    As long as you understand the caveats and do your research, it is possible to successfully secure a property without a conventional loan.



    The Pros and Cons of Taking Out a Thrift Savings Plan Loan #get #a #loan #today


    #tsp loan
    #

    The Pros and Cons of Taking Out a Thrift Savings Plan Loan

    By Michael Roberts. Government Careers Expert

    Michael Roberts is a career government employee with service in state and municipal government. Read more

    One of the three primary methods employees under the Federal Employees Retirement System use to save for retirement is the Thrift Savings Plan. This plan functions much like a 401(k) offered through private investment companies and employers. The other two primary methods federal employees use for retirement are a pension and Social Security .

    Continue Reading Below

    However, the US Office of Personnel Management allows federal workers to withdraw money before retirement following plan provisions. OPM administers the Thrift Savings Plan.

    One way to withdraw money from the Thrift Savings Plan is a loan. The two types of Thrift Savings Plan loans are general purpose loans and loans for the purchase or construction of a primary residence.

    While there are advantages and disadvantages to taking out a Thrift Savings Plan loan, the disadvantages far outweigh the advantages to such an extent that OPM advises federal employees to exhaust all other loan options before borrowing from their Thrift Savings Plan accounts.

    That said, outlined below are the pros and cons of taking out a Thrift Savings Plan loan.

    The positive aspects of taking out a Thrift Savings Plan loan are the following:

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    The negative aspects of taking out a Thrift Savings Plan loan are the following:



    Conventional Loans: Pros and Cons


    #conventional loan
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    Conventional Loans: Pros and Cons

    A conventional loan is any mortgage which is not guaranteed or insured by the federal government. Conventional loans were the first traditional mortgage loans made by local lenders. The loans were held in the lender’s investment portfolio until they were either paid in full or foreclosed upon. Although it enabled the borrower to build a business relationship with the lender, this practice was generally not in the lender’s best financial interest. When rates rose, lenders found themselves in the position of receiving below-market interest on their loans, in addition to not being able to recycle the funds to lend to other borrowers.

    With the advent of the secondary market in the late 1930s, lenders could assemble and sell their loan packages, thereby bringing funds back to be loaned out to other borrowers. Today, although some lenders still keep loans in portfolio, the overwhelming majority sell them to the secondary market.

    There are a number of advantages that conventional loans could present to prospective borrowers, some of which are listed here:

    However, conventional loans may also pose some disadvantages, including:

  • Origination fees and other costs are also determined by individual lenders and may therefore be higher than those of other programs.
  • Because mortgage documents for conventional loans can vary by state and even by lender, the lender could specify that certain clauses be included in a mortgage contract; for example, alienation (due-on-sale), prepayment penalty . or acceleration clauses.
  • Loans with greater than an 80 percent loan-to-value (LTV) ratio will require the borrower to purchase Private Mortgage Insurance.
  • Some lenders may require that the borrower pay nonrefundable application or processing fees at the time of loan application.
  • The lender may not allow some creative financing options for the buyer.

    The rules regarding what a lender can and can’t do in conventional mortgage lending is determined by the loan’s ultimate destination. A lender who wants to sell loans to the secondary market has one set of rules that must be adhered to. If the borrowers require PMI, another set of rules have to be applied. Because a majority of all conventional loans are sold to the secondary market, those guidelines have become the general standard for conventional mortgages.



  • What are the pros and cons of consolidating my student loans?


    #consolidating student loans
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    What are the pros and cons of consolidating my student loans?

    Many students graduate with more than one student loan, and some graduate with as many as a dozen or more. If you currently have multiple student loans, you could benefit from a consolidation loan on your student debt. You may be able to extend your repayment terms, pay a lower average interest rate, reduce your monthly payment amount, fix your interest rate or simply benefit from having a singular, simplified and streamlined monthly payment amount.

    However, loan consolidation is not always the answer. You may end up paying more in total interest after you consolidate your student loan debts. You could lose some of the benefits from your subsidized student loans. Your grace period on some loans could end prematurely, or you may end up consolidating at the wrong time – too early or too late.

    Not all student loan debts can be consolidated, although most federal loans can. Loans that can be consolidated include direct subsidized and unsubsidized loans, subsidized and unsubsidized Stafford loans, direct PLUS loans, SLS loans, Federal Perkins loans and Health Education Assistance loans, among others. Private education loans are not eligible for consolidation.

    Benefits of Consolidating Student Loan Debts

    The most obvious benefit of a consolidation loan is that you can replace your multiple loan payments with a single payment. Sometimes, you can fix a lower interest rate to that single payment than the average rate that you were paying on your other multiple loans, which is especially beneficial if you are able to turn variable rate loans into a single, fixed, low-interest rate loan.

    It is also possible to move into an alternate repayment plan to accommodate your changing life circumstances. Maybe standard, 10-year repayment plans are no longer the best option for you. You can extend repayment or graduate your repayments, for example.

    You can also reset any existing deferments or forbearance (typically three years) on a student consolidation loan.

    Costs of Consolidating Student Loan Debts

    You are likely to lose any grace periods that your loans currently enjoy after a loan consolidation, meaning that you have to begin making payments immediately. Sometimes a new lender delays your payments to compensate for this, but not always.

    As with any consolidation loan, the net effect of your new student loan may be that you end up paying more in interest (or even more in principal) when all is said and done. This is especially true when you are extending the repayment length on the debt.

    Some federal loans, such as Stafford loans, have subsidized interest benefits that can survive a consolidation. Your Perkins loans, however, do not. The loss of subsidized benefits can demonstrably impact the amount of interest that you pay on a debt. Make sure you understand what you are giving up before consolidating.

    You can only consolidate student loan debt once, which means that if you consolidate today but would have realized greater benefits by consolidating two years from now, there is nothing you can do. There is an opportunity cost with student loan consolidation.



    What Is an FHA Streamline Refinance – Guidelines, Pros – Cons


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    What Is an FHA Streamline Refinance Guidelines, Pros Cons

    By Michele Lerner

    If you have an FHA-insured mortgage on your home, you may have the opportunity to refinance with an FHA streamline refinance. While the hype surrounding the FHA streamline refinance program makes it sound fabulous, the reality is that mortgage lenders often put what are called overlays on FHA guidelines. In other words, while the FHA says you can basically refinance your underwater home even if you have bad credit and are unemployed, most lenders require you to meet a certain level of standards.

    That said, if you have an FHA loan and can qualify for an FHA streamline refinance, it can be a great deal. Just make sure you compare your options for other types of mortgage refinance.

    Unlike other mortgage refinance options, the FHA streamline refinance program offers borrowers with an existing FHA mortgage a new FHA-insured home loan without requiring an appraisal or any documentation of income or assets. Furthermore, depending on when the current loan was taken out, lower mortgage insurance fees may be available to the borrower.

    FHA Streamline Refinance Process

    Before you take any refinancing steps, make sure you meet the few guidelines established by the FHA:

    If you meet these guidelines, you can contact your current mortgage lender to inquire about a streamline refinance. You can also contact other mortgage lenders to compare rates and fees. Different lenders have different loan requirements, so even if one lender turns you down, another may be willing to work with you.

    In addition to various individual mortgage lender requirements, you need to meet the FHA net tangible benefit requirement, which says that refinancing will either help you avoid future mortgage rate increases (refinancing from an adjustable rate mortgage to a fixed-rate mortgage works for this) or will reduce your total monthly payment including principal, interest, and mortgage insurance by at least 5%. The interest rate doesn t have to drop by 5% just your payment.

    That can be a catch for many homeowners, because even though you have been paying mortgage insurance premiums with an FHA loan, you need to continue paying them with a refinance. Depending on when you took out your current mortgage, those mortgage insurance premiums could be higher on your new loan and erase any payment reduction achieved with a lower interest rate.

    FHA Mortgage Insurance

    How much you ll pay in mortgage insurance depends on when you closed on your current mortgage. As of June 11, 2012, the FHA offers reduced upfront mortgage insurance premiums to borrowers who took out their current mortgage prior to June 1, 2009. Those borrowers must pay 0.01% of the loan amount.

    If you took out your current loan on or after June 1, 2009, you ll pay a higher upfront mortgage insurance premium of 1.75%. That s a whopping difference from $10 to $1,750 on a $100,000 mortgage. The upfront mortgage insurance premium can be added to your loan balance.

    As you already know if you have an FHA loan, you have to pay both an upfront mortgage insurance premium and an annual mortgage insurance premium. However, the annual mortgage insurance premium is eliminated if your loan-to-value (LTV) is 78% or less.

    Here s the breakdown on annual mortgage insurance premiums: If you are refinancing a loan taken out before June 1, 2009, your annual mortgage insurance premium will be 0.55%. If you are refinancing an FHA loan taken out more recently, you will need to pay 1.25% of the loan amount. The annual mortgage insurance premium on a $100,000 mortgage would be $550 at the lower rate compared to $1,250 at the higher rate. These premiums are paid on a monthly basis, so on a $100,000 loan you would pay $58 more per month at the higher mortgage insurance rate.

    Pros Cons of a Streamline Refinance

    Clearly, homeowners with an FHA loan taken out before June 1, 2009 benefit the most from the FHA streamline refinance program, but even those with more recent loans should compare their current monthly payments with their payments under a refinance.

    Advantages

    1. Easy to Qualify. FHA financing is designed to help borrowers with less-than-perfect credit. If your credit score is less than 740 and above 620 or 640, compare your options for conventional and FHA financing. If your credit score is above 740, conventional financing is likely to be the better deal.
    2. No Appraisal Required. Even if you owe more on your mortgage than your home is worth, an FHA streamline refinance is an option as long as you find a lender who does not require an appraisal. However, that can be a challenge, even though the FHA says an appraisal is not needed.

    Disadvantages

    1. Mortgage Insurance. When you take out a new FHA loan, you must pay upfront mortgage insurance again. And if your loan-to-value is higher than 78%, you must pay annual mortgage insurance premiums. The mortgage insurance increases your loan balance and your monthly payments. If you took out your loan after June 1, 2009, your mortgage insurance premiums will be higher on your new loan.
    2. Closing Costs. The FHA says borrowers cannot finance their closing costs into their loan balance. Closing costs vary widely by location: The average closing cost is approximately 3% of the loan amount, or $3,000 on a $100,000 loan. Most lenders allow you to wrap closing costs into your loan balance for a conventional loan refinance. Your options on an FHA streamline refinance, however, are to pay your closing costs with cash or to find a lender who will do a zero cost refinance.   While zero cost sounds like a great option, what this actually means is that you must pay a slightly higher interest rate over the life of your loan to reimburse the lender-paid closing costs.

    If you are considering a zero-cost FHA streamline refinance, be sure to compare your options for refinancing into a conventional loan to see which mortgage product results in the lowest monthly payments and the lowest long-term costs.