Home Loan Checklist – Important for Choosing a Home Loan That Suits Your Needs

When you are looking around to choose a home loan, it can be helpful for you to use a “Home Loan Checklist”. It will help you make a decision that will suit your needs and circumstances. You can use the checklist for any purpose, including:

>> Buying your first home;

>> Refinancing your existing mortgage;

>> Consolidating your debts

>> Cash out/equity release;

>> Buying an investment property;

>> Constructing your new home; or

>> Upgrading or renovating your existing home.

You can also use the checklist to avoid applying for loans that don’t suit your particular needs or circumstances.

Ask your Lender/Credit Provider for a copy of their Key Facts Sheet

While doing your research, the best way to compare home loans is to ask different lenders/credit providers for a copy of their “Key Facts” sheet because it will tell you:

>> The total amount to be paid back over the life of loan;

>> The repayment amounts and payment options;

>> The fees and charges payable; and

>> The comparison rate which will help you check the total cost of a home loan against other home loans.

What is Included in the Home Loan Checklist?

Here is a list of things you should look out for before you sign up and which are included in the Home Loan Checklist.

1. INTEREST RATES

This is where you need to know details of the interest rate percentage (%) charged by lenders/credit providers for any of the following home loan options, including the comparison rate:

Variable Interest Rate Home Loan

With this option, the interest rate increases or decreases in accordance with the rates in the marketplace.

Fixed Interest Rate Home Loan

With this option, you may elect to fix (lock-in) an interest rate typically for 1 to 5 years.

Split Loan (Combined Variable/Fixed Interest Rate) Home Loan

This option allows you greater flexibility because you may elect to divide your loan into a number of splits. For example:

>> You can arrange for one split loan as a variable interest rate; and

>> You can arrange for another split as a fixed interest rate.

Introductory (Honeymoon) Interest Rate Home Loan

At the start of a new loan, you may be offered an interest rate for an introductory or honeymoon period which is usually at a lower rate. However, at the end of the honeymoon period, the loan will eventually revert back to a standard variable rate.

Comparison Rate

You need to check the Key Facts sheet for comparison rates. As the comparison rates will help you to easily compare the total cost of loan against other loans, including:

>> Interest rates;

>> Application fees (sometimes also called the establishment, set up or upfront fees); and

>> Ongoing fees.

2. REPAYMENT OPTIONS

This is where you need to know what repayment options are available to you including:

Additional Repayments

You need to know if you can make additional repayments which are in addition to your normal minimum monthly repayments.

Redraw Facility

You need to check the Key Facts sheet to find out if you can make extra lump sum repayments over and above your contracted loan repayments. You will also have to check whether you can then redraw (withdraw) these extra funds from your loan when you want them. You may find that in some cases, lenders/credit providers may not release your redraw funds when you want them.

Paying Weekly or Fortnightly

You need to know if you can select weekly or fortnightly repayments as it will enable you to repay (pay off) your loan sooner.

3. FEES and CHARGES

To help you work out the true cost of a home loan, you need to know the details of any fees and charges that may be charged including:

Application Fee

It is also called establishment, setup or upfront fees. You need to know details of the application fee charged by lenders/credit providers which covers or partially covers their costs of setting up or establishing loan.

Exit Fees

It will help you to know if your current lender/credit provider will charge an exit fee for the early pay out of your loan, and if so, how much you will be charged.

Break Costs

It will help you know if your lender/credit provider will charge a break fee for ending a fixed rate contract before the fixed rate expires, and if so, how much you will be charged.

Ongoing Fees

You need to know details of any ongoing account keeping fees that the lenders/credit providers will charge against your loan (i.e. these are usually charged monthly).

Additional Charges

You need to know if there are any additional charges to be made against loan, and if so, you need to know whether you can pay these fees upfront or have the fees added to your loan.

Finding a suitable home loan that suits your needs is a major financial decision. So, don’t rush into anything too quickly. Always remember that while you are shopping around for a suitable home loan, do your research and review the Key Facts sheet closely before you sign up for loan.

Seek Expert and Professional Advice

So, now that you have a basic understanding of why a home loan checklist is important, you should also consider seeking help from a professionally qualified finance broker. He/she will help you to create a personalized home loan checklist. He/she will save you lots of valuable time running around on your own and assist you in determining which potential lender/credit provider best meets your needs and circumstances.

Payday Loan Providers Vs. Car Title Loans: Which One Works For You?

What kind of loan would work best for you? There are payday loan providers that also provide car title loans. A perfect example of a company is one that offers choices to service their customer’s needs as best as possible.

The two types of loans are both alternative loans and do not make credit checks to determine approval status. They are very different though. It is important for you to understand how the two loans differ. When you are looking for fast cash, it is important to find the best service to fit your personal situation.

Secured loans – These loans are secured by personal property as collateral. In this case, your vehicle is what secures a car title loan. In order to qualify for this particular loan, you must own the title or ‘pink slip’.

The loan amount is based on the resale value of the vehicle. Your loan will only be approved for a portion of that amount. You will get your money the same day and continue to have use of the car. Unlike pawnshops that keep your property at the store, you will keep possession of the vehicle.

Loans are typically due 30 days later. It gives you a bit more time than an average two week payday loan. You will need that time since these loans are most often larger than their payday counterpart. The interest is high and the full payoff may prove challenging. Don’t avoid payment. You are better off working with the lender to work out a payment plan rather than risk your car. Secured loans in default will collect the collateral to sell and fulfill the terms of the loan.

Payday loans – These loans are unsecured. There is no collateral, just a contract to pay. The loan amount is based on monthly take home income. As long as you have not defaulted on other payday loans the approval process is very easy. The payoff is based around the applicant’s pay cycle. On average, the term for payday loans is approximately two weeks. With storefront lenders, money is received same day and a post-dated check is left to cover the future payment. Online lenders will transfer money into your bank account by the next business morning. They will automatically withdraw the payment on the determined payment date. Both processes work very smoothly.

If this loan goes into default, it will get sold to a collection company. This means that the debt will end up on your credit history report as bad debt. What began as a no credit check loan will end up hurting your credit if not paid correctly. Don’t ignore the debt, talk to your lender and work something out so you can make good on your loan.

Since these loans both carry high finance charges, they should be viewed as last resort money. When you have turned over every other stone and came up dry, alternative money will help. Why save them for last? The high interest and short terms will sometimes be tough to resolve. Money help should never hurt.

Which loan will work best for you?

Take both into consideration. Many applicants do not own their car outright and end up applying for payday loans. If you need a larger loan and do own the pink slip, you may find that a title loan would suit your needs. Whichever you choose, make sure you follow up the application with creating a payment plan. You want the loan to help, so use the short time you have to gather the funds necessary to pay the loan plus fees in full.

The History of Student Loans in Bankruptcy

Student loans are basically non-dischargeable, almost everyone knows this. There are some very specific circumstances where even today you can have your student loan debt discharged, but that is a narrow exception that often requires a fight and money to fight. We will discuss the current state of dischargeability in a future post.

The landscape around student loans and bankruptcy has not always been so desolate. Not so long ago these loans were dischargeable. Back when they were dischargeable, the cost of an education was much lower and the total student loan debt was a fraction of what it is now. With student loan debt currently being a 1,200,000,000,000.00 (One Trillion Two Hundred Billion) dollar problem holding people back from purchasing homes or taking part in the broader economy, with a little help they may become dischargeable yet again.

A Brief History.

Student loans really did not pop into existence in America until 1958 under the National Defense Education Act. 1. These loans were offered as a way to encourage students to pursue math and science degrees to keep us competitive with the Soviet Union. 2. In 1965, the Guaranteed Student Loan or Stafford Loan program was initiated under the Johnson Administration. Over time, additional loan programs have come into existence. The necessity of loans for students has become greater as the subsidies universities receive have fallen over time. Take Ohio State for example. In 1990, they received 25% of their budget from the state, as of 2012 that percentage had fallen to 7%. In the absence of state money, universities and colleges have increased tuition to cover the reduction in state money.

The Rising Cost of Education.

The cost of higher education adjusted for inflation over time goes something like this, in 1980 the average cost for tuition room and board at a public institution was $7,587.00 in 2014 dollars and by 2015 it had gone up to $18,943.00 in 2014 dollars. The cost of a higher education in 35 years with inflation accounted for has gone up by 2.5 times. Compare this to inflation adjusted housing costs which have remained nearly unchanged, increasing just 19% from 1980 to 2015 when the bubble and housing crisis is removed. 3. Or compare to wages which, except for the top 25%, have not increased over that same time period. Looking at affordability in terms of minimum wage it is clear that loans are more and more necessary for anyone who wants to attend university or college. In 1981, a minimum wage earner could work full time in the summer and make almost enough to cover their annual college costs, leaving a small amount that they could cobble together from grants, loans, or work during the school year. 4. In 2005, a student earning minimum wage would have to work the entire year and devote all of that money to the cost of their education to afford 1 year of a public college or university. 5. Now think about this, there are approximately 40 million people with student loan debt somewhere over the 1.2 trillion dollar mark. According to studentaid.gov, seven million of those borrowers are in default, that is roughly 18%. Default is defined as being 270 days delinquent on your student loan payments. Once in default, the loan balances increase by 25% and are sent to collections. The collections agencies get a commission on collected debt and are often owned by the very entity that originated the loans, i.e. Sallie Mae.

The Building of the Student Debt Prison.

Prior to 1976 student loans were dischargeable in bankruptcy without any constraints. Of course, if you look back at statistics from that time, there wasn’t much student debt to speak of. When the US Bankruptcy Code was enacted in 1978, the ability to discharge student loans was narrowed. Back then, in order to have your loans discharged, you had to be in repayment for 5 years or prove that such a repayment would constitute an undue hardship. The rationale for narrowing the discharge was that it would damage the student loan system as student debtors flocked to bankruptcy to have their debt discharged. The facts, however, did not support this attack. By 1977 only .3% of student loans had been discharged in bankruptcy. 6. Still, the walls continued to close on student debtors. Up until 1984, only private student loans made by a nonprofit institution of higher education were excepted from discharge. 7. Next with the enactment of the Bankruptcy Amendments and Federal Judgeship Act of 1984, private loans from all nonprofit lenders were excepted from discharge. In 1990, the period of repayment before a discharge could be received was lengthened to 7 years. 8. In 1991, the Emergency Unemployment Compensation Act of 1991 allowed the federal government to garnish up to 10% of disposable pay of defaulted borrowers. 9. In 1993, the Higher Education Amendments of 1992 added income contingent repayment which required payments of 20% of discretionary income to be paid towards Direct Loans. 10. After 25 years of repayment the remaining balance was forgiven. In 1996 the Debt Collection Improvement Act of 1996 allowed Social Security benefit payments to be offset to repay defaulted federal education loans. 11. In 1998, the Higher Education Amendments of 1998 struck the provision allowing education loans to be discharged after 7 years in repayment. 12. In 2001, the US Department of Education began offsetting up to 15% of social security disability and retirement benefits to repay defaulted federal education loans. In 2005, “the law change” as we call it in the Bankruptcy field further narrowed the exception to discharge to include most private student loans. Since private student loans were given protection from discharge in bankruptcy there has been no reduction in the cost of those loans. 13. If the rational for excepting student loans from discharge is that the cost to students to obtain loans would soar, this fact would seem to lay waste to that argument.

In the wake of the slow march towards saddling our students with unshakable debt, the government created a couple of ways to deal with government backed student loans outside of bankruptcy. In 2007 the College Cost Reduction and Access Act of 2007 added income based repayment which allows for a smaller repayment than income contingent repayment, 15% of discretionary income and debt forgiveness after 25 years. 14. In 2010, the Health Care and Education Reconciliation Act of 2010 created a new version of income-based repayment cutting the monthly payment to 10% of discretionary income with debt forgiveness after 20 years. 15. This new improved income based repayment plan is only for borrowers who have no loans from before 2008. Further, those with loans in default, will not qualify for income based repayment unless they first rehabilitate those loans. If you are interested in seeing if your loans qualify for income based repayment or income contingent repayment please visit student aid dot gov. Unfortunately, none of these programs do anything to deal with private loans, a growing problem currently at around $200,000,000,000.00 (Two Hundred Billion) or around 16% of the total student loan debt.