Your Questions About Save Loan Program

Susan asks…

What should a potential home buyer do now?

I have a friend that is young and single and he is saving up to buy some property and build a home. He tells me that he has about $25K in the bank. With the mortgage situation and the bailout going on, what should he do? Should he buy now before inflation hits or should he wait for the real estate prices to hit bottom? I’m a little worried about the economy and don’t know what to tell him.

John answers:

25,000 is relative to where you live. That could be a big amount in some areas and not enough for some. Last time we tried to buy we had the option to do 0% down, we waited a bit, then it became 5% and we were able to save enough for that but since its a new construction, it took a long time before it got built, so the loan had to be redone and the 5% was gone, it became 20% down and so we had no option but to go through FHA loan for 3% but so many conditions so we didnt get it. Then now we have got a 10% downpayment loan and cant wait to close escrow cause we just found out that the %tage downpayment is going to get higher. We felt like we were being led along by the government and the lenders who keep changing their programs. You get approved then after a few weeks or a month, the loan program goes away. Also the rates are very volatile so there really is no way to gauge whether its the right time to buy or not.

I suggest, if he finds a home where he thinks he can be happy and live for a long long time then go for it. A house is primarily where will be happy at. So if investment is the reason to buy then maybe it is not the right time to buy.

Ken asks…

What is the best way to get rid of your student loans?

I already pay a little more then I need to each month. Is there anything else that can be done? Programs? anything?

John answers:

Unfortunately, there isn’t anything more you can do. Pay as much as you absolutely can each month so you’re taking out principle in addition to interest and you’ll knock off a year or two and save yourself money in the long run.

Organizations such as AmeriCorps and Teach for America (which works in conjunction with AmeriCorps) offer “education vouchers” which you can apply towards your student loans. Getting a position with either program is really hard (I heard they had 19,000 applicants for 2,400 positions last year) but the experience and benefits are phenomenal. Here is a link to the Wikipedia entry for TFA, and it links to TFA, AmeriCorps and other helpful sites:

Michael asks…

How much money do I need to save up to buy a home in Los Angeles?

If I am a first time home buyer, how much money do I need to save up before I can purchase a home in LA County? Is there any programs out there that can help or provide information on how to get started?

John answers:

FHA loans require only a small downpayment
VA loans require no downpayment
Conventional loans require 20% downpayment

Carol asks…

How long until I have to pay subsidized loans?

I graduated in May 2012 and enrolled in a masters program at another university. Currently I am attending school part time. I have a good job and have decided not to pursue additional schooling after this semester is over (May 2013) I paid off my unsubsidized loans. I still owe subsidized loans, but how long of a grace period will I have until the subsidized loans begin garnering interest and I must begin making payments? I am just planning on saving as much money as I can and pay off the loans all in one big payment.

John answers:

You have a six month grace period after graduating or dropping below 1/2 time. You should check with your lender to see if the time in between getting your Bachelor’s and starting your Master’s counts against you.

If you started in the fall of 2013, those months may have just been considered “summer” and not eaten up any of your six months of grace.

Sandra asks…

Loan Application Program?

Hello there! I am creating a Loan Application Program. I have tables like Person, Customer, LoanApplication, and LoanType in my Database. In every customer/client it requires a loan guarantor/co-maker.

Person(PersonId, FName, MName, LName, etc.)
Customer(CustomerId, PersonId, CustomerNumber, etc.)
LoanApplication(LoanApplicationId, CustomerId, DateStarted, etc)

I am saving the Customer fullname in Person table.
My question is. Do I have to save the co-maker’s name in Person table even though the co-maker is not a customer/client yet or do I have to create a separate table for the co-maker?

Thanks in advanced for the reply.

John answers:

To maintain database normalization, you will need to store all people–applicants, cosigners, guarantors, etc.–in the Person table. You don’t need the Customer table now.

Now, you will need to setup some sort of relationship between the Person table and their relationship/role on the loan. The first method creates a field for each role in the LoanApplication table. These would be a foreign key to the Person table. As long as you have one of each, this would be easy to maintain–but once you start adding CusomerId2, CustomerId3, CosignerId2, etc.–your queries will larger and more redundant. Plus is makes it more difficult to query for loans with multiple cosigners, applicants, etc.

LoanApplication(LoanApplicationId, CustomerId, GuarantorId, CosignerId, DateStarted, etc.)

The second method creates another table to hold the relationship between each person on the loan. This would make it easier to expand your application in the future because you could have unlimited roles in the loan. For example, you could have multiple borrowers, multiple guarantors, and multiple cosigners.

LoanApplication(LoanApplicationId, DateStarted, Amount, etc.)
LoanApplicationToRoles(LoanApplicationId, PersonId, RoleId)
Role(RoleId, Description)

I hope this helps. Good luck!

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