Your Questions About Save Loan

Helen asks…

how much time and $ would i save? HOME LOAN?

how much time and $ would i save if i had a loan of $370,000 over 30 years and i paid my repayments weekly also had $40,000 in a offset account linked to the loan. only fee is $10 a month. and just suppose the interest rate is at 6.90% for the whole time of the loan? cheers

John answers:

Main advantage of Home Loan is the conversion of Rent / lease amounts to be paid towards the repayment of the loan. Rest is subject to timely repayments without any delay and interest or late fee.

Chris asks…

best way to save money/loan for a commercial helicopter piloting career?

best way to save money/loan for a commercial helicopter piloting career. okay ill explain i have a huge passion for helicopters and yeah i want to become a professional helicopter pilot soon, i researched the rates and its gonna cost 67-70k (damn that’s a lot, but well worth the investment) the bad part is im in debt about 15k i owe 10k for school loans, yeah i went to college and didn’t like it and quit/failed cause it bored me and yeah more to the story than i care to tell..lol 3k for medical and 2k for stupid cell phone company at&t.. so as far as i know loan will be out and my chances for a loan no matter what i save are very, very, very slim so whats the best idea/way for me so save enough to get going on my dream career? save money work my ass off as a cna working 65hrs a week for 2 years then invest…any hints or help…..btw im not going the military route…my family would be so, very, so disappointed it would break there hearts if i did that(im not dissing military im saying i don’t have the guts to go military and it would sadden my family)…so yeah such a long, long story any advice i would really really love to hear…….i will give 5stars and u will get lots of points for a really good informative answer..so plz give me ur advice experience! id love to hear your story’s/experience u fellow heli pilots!

John answers:

Understood you will not consider the military route –
You will therefore spend nearly US$80,000 to qualify as Commercial helicopter pilot –
You will have at that time some 250 hrs total experience –

How will you compete against Army veteran pilots with 2,000+ hrs…?
They get the jobs as EMS pilots, or offshore platforms operations –

I do not criticize you – I just tell you the plain facts –

Pilot training loans…?
Banks do not loan to pilots for training –
Since most of them have a hell of a time to reimburse the loans – Bad risk –
Unless your parents take a loan on their house…?
.

James asks…

Pay off loans or save for a house?

I owed $120 but I bought it down to $21k. I know it is the time to buy with the lowest interest rates. But b/c I’m putting my whole paycheck into my school loans. I’m really broke for a 20% downpayment. I would be able to pay off my loans in 4 months but have to save 2 years for a 20% downpayment. By then I’m afraid I will lose out on the low interest rate and actually pay more at the end.

My friend suggested save 10% and pay the remainder of my loans slowly since is (4.5%). AND just pay the PMI. That way I can still enjoy the lower interest rates and not miss the ride. I should be able to save 10% downpayment in a year.

Should I pay off my loans in 4-5 months? and wait another 2 years?
Or save now for my 10% downpayment and pay later?

I need someone help me figure which way will be cheapest in the long run?
for clarification: I owe 21k on my students loan now.
My husband and I make $140k before taxes and looking to buy a $300k home. for 15 years. and 10% or maybe 20% down

John answers:

You have presented a very good question and there is not one correct answer. Nobody knows the direction of the housing market over the next year or two years. We do know that housing prices hit a low level at the beginning of 2012 and have increased, in most parts of the country. There are many different housing price indices that indicate a rise of about 6-8% over the last year, but we all know that there are great differences between states, counties, cities, neighborhoods, and even streets.

Tip #1: Learn about housing prices and trends in the neighborhood you wish to purchase a home. Do on-line research, speak to agents and go to open houses.

The most important question before you even begin to look for a home is whether you will qualify for a home purchase loan. That depends on the three major factors:
1. Your credit score.
2. Your debt-to-income ratio (DTI)
3. Your down payment (equity) and loan to value ratio (LTV),

I agree with your friend that it is well worth considering buying now, putting less down payment, but getting into the market at a lower price. This is especially attractive given the low interest rates today, which means big savings over a long period of time.

Since your student loans are at a fairly low interest rate (4,5%) and are for a fairly small amount of money, I would suggest not paying them off immediately, but rather saving money for your down payment.

Tip #2: Make sure your DTI is low enough to qualify. Your overall DTI will affect the amount of loan you can qualify for. Your overall household debt (mortgage principal and interest, mortgage insurance, property insurance and property tax) plus your other monthly debt (minimum payment of credit card, student loans, auto loan, court ordered payments, and installment payments) cannot exceed about 43%. (A lower number around 28% for housing related and 36% for overall debt is more desirable),

Bottom Line: Start saving for a home. Start by getting pre-qualified and learn about the housing market. If you have very good-excellent credit scores, then look into Private Mortgage Insurance (PMI). This is available sometimes up to 95% financing. Once you have a better idea and want to bid on homes, then get pre-approved.

There is no way, except hindsight, to know which is cheapest or the best investment. However, with today’s low mortgage rates and low housing prices, this is a good time to enter the market. Your student loans should not be your top priority, but just part of your portfolio. They should not replace basic savings and investment needs.

Check out BIlls.com article about home affordability and the housing market: http://www.bills.com/home-affordability-and-2013-housing-market/

George asks…

Financial advice please, paying off a loan vs. saving for a home?

I have 70,000 in student loans. They are federal and at 2.6% interest. I had no family to help me and was accepted into a program and let the name of the school get me and I took out loans. Regardless of my degree I am only making $50,000 a year. I want to buy a home like anyone else, so I want advice on how to pay the loan. The two options they gave me were:
1. Pay back the loan at $680/mo. for 10 years paying about $10,000 total interest.
2. Pay back the loan at $300/mo. for 24 years paying about $25,000 total interest.
Both suck, but what’s done is done and I’ve got to move on.
I am planning to save (about $1500 a month for 5 years) and build a home on some land I own with no mortgage, no interest.
If I take the lower payment plan I was thinking with it being low percentage rate, it would maybe save me rather than getting a mortgage at a higher percentage, and maybe save the extra money per month for the first 5 years and put it towards a home to build in cash?
Or should I just pay it off at the higher payment and rent and just wait? My rent is about the price of a mortgage, so I am not sure which route to go. Will they let you pay low payments for years and then change to higher after I build a home, and if so would it not even be worth it with the interest paid? It is confusing, so I need some advice.
Thanks for the advice. I just don’t see how getting a mortgage at 5% for 2 years would be better than keeping the student loan at 2.6% and saving as much as possible and building a house, but obviously if I were financially smart, I never would have taken them out in the first place lol.
I meant to say I just don’t see how getting a mortgage at 5% for *20* years… not 2!

John answers:

Deciding to save or pay off a loan is often a difficult decision. In your case you have loans at very attractive interest rates. (Check to see if those are fixed interest rates or variable).

Create and maintain a budget. Make sure that you take into account your net income by deducting your income tax and social security deductions. If you are making $50k per year, then your take home pay might be closer to $3125 per month. You say that you plan on saving $1500 per month. Is that a reasonable goal?

I would recommend that you take these steps:
1. Find out if your student loans have a fixed rate. (If it is variable, then it could end up costing more and have a higher monthly payment).
2. Find out if you can make prepayments on your student loan.
3. If it is a fixed rate, then take it for a longer time. You won’t find such cheap money anyplace else. Also, by having a smaller monthly payment, you can ensure that you make your payments on time.
4. Saving money for you home is a great goal. Even if you have to take a mortgage, it still might be worth your while. Mortgage lenders also look at your debt to income ratio, so any monthly payments you have on debt will lessen the amount you can qualify for.

Steven asks…

should I payoff my student loans or save for a house?

I can’t do both unfortunately… we are outgrowing our home and will have to move in 5 years give or take. We have 20k in student loans and have about 20k in equity in our current home. The loans are currently deferred because we can’t affort to add the $240 per month payment to our monthly budget. We have $0 credit card dept and have excellent credit ratings… thoughts?

John answers:

SAVE!!!!

Good cash reserves will look good on a loan application. And will be a great fall back if you find yourself between jobs for a time.

As a loan officer, I would rather see savings than no debt…. Because you can easlity rack up more debt and I know it. The savings show responsibility. There is NO judgement against you for paying out your student loans within the terms.

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