Your Questions About Save Loan Program

Maria asks…

Nursing student private loans?

I am beginning an RN nursing (adn) program at my community college. Our school sponsors no private loans, and my federal loans are all taken by tuition. I need living expense money badly. What are some good, if any, private loans that do not have to be connected with a person’s school? What about Sallie Mae “Tuition Answer”??? Any good or bad comments about this loans?

John answers:

Do some serious research. Student Loans are hurting people beyond belief. There is plenty of free money, even a few years in the military is a better alternative. Here is an article from CNN/Money magazine:

Student loans – a life sentence
Forget about getting married and buying a home. This generation is thinking about next month’s payment.
By Christian Zappone, staff writer
May 1, 2006: 4:25 PM EDT
NEW YORK ( – Mayrose Wegmann, 25, should have been starting on her dream career as a political consultant by now. And saving toward her first home.
Instead, Wegmann, who graduated with a degree in political science and journalism from the University of Iowa in 2004 and moved to Washington, D.C., is working at a non-profit because it pays significantly more than entry-level politics work. And she won’t even consider buying a home for several more years.
In fact, she won’t consider much except how to meet the $300 a month she owes on her $34,000 student loan balance.
“The school debt makes you decide [about your career] based on the money factor. Not based on what you want to do,” said Wegmann.
The Class of 2006, set to graduate this month, will soon be in the same boat.
Approximately two-thirds of all students use loans to pay for their higher education, according to the Center for Economic and Policy Research. The average debt is $15,500 for public schools and $24,600 for private – many students rack up even more on their credit cards.
Call it a reverse dowry: college debt diverts careers and delays or impedes graduates’ plans to get married, buy a home or even to start a family. The effects can last years.
A 22-year old student graduating this year who consolidates their $40,000 loan at 6.125 percent will need to pay $243 a month…until they’re 52. By that time, they will have paid $47,494 in interest alone.
A reverse dowry
“My student loan debt is my biggest source of stress in my life at the moment,” said Steve Desroches, a 2002 graduate from Columbia University’s Graduate School of Journalism. “I live paycheck to paycheck.”
The degree left Desroches, who works for a newspaper on Cape Cod, $50,000 in debt with no savings. He’s unable to buy a needed car or to even think about entering Massachusetts’s “out of control” real estate market.
The repayments were so financially restrictive he briefly considered declaring bankruptcy, until he learned it wouldn’t affect his student loans because they’re federally guaranteed.
“My feelings about my degree now? My graduate education was invaluable [to my career], but it wasn’t worth $50,000, or more accurately, it isn’t worth the debt. My options are definitely limited.”
Christine Moellenberndt of Sacramento, California has given up on the idea of owning a home, at least anytime in the next 10-15 years. She graduated last June from the University of California, Santa Cruz with a degree in anthropology, and moved back in with her mother when she realized not doing so would mean living paycheck to paycheck with no chance of paying down her debts.
“That $675 I could be spending in rent could also be a good chunk of a credit card payment, or a huge payment for my student loans. I see that as a bit of a better investment than living on my own and struggling paycheck to paycheck.”
Moellenberndt says at least half her monthly income working at a state regulatory agency goes to pay off her $18k in federal student loans. And although the debt is daunting, her plans to become a community college professor call for an advanced degree…hiking her debt in the future.
A growing issue for the economy and society
The cumulative effect of such student debt on graduates is unclear, although few would argue that its impact will be positive for the graduates, the economy or society.
“We’ve never done this to a generation of young people before,” said Dr. Heather Boushey, Senior Economist at the progressive Center for Economic and Policy Research. “We’ve never put a generation in their 20s in debt they can’t get out of before they started their work life.”
“The normal approach in any healthy society is to help young married couples get started in life through marital gifts, dowries, and the like,” Allan Carlson of the socially-conservative Howard Center for Family, Religion, and Society said.
“We now burden many young adults with student debt, sometimes massive in nature; the price being paid includes marriages delayed or foregone and fewer children. This is foolish public policy.”

Chris asks…

Could I get a home loan with no job, if I put a 60% down payment, and have 3 years worth of payments saved up?

I basically, want to buy a house in order to avoid paying for rent while going back to school. Then after I finish school I will sell the house. I will put 60% down, and have 3 years worth of mortgage payments/insurance/utilities/living expenses saved up.

John answers:

Limited-documentation and no-doc loans once were used primarily by self-employed professionals, small-business owners and individuals who are heavily dependent on periodic bonuses or commissions.

In limited- or no-documentation programs, applicants typically state their income and assets to the loan officer but aren’t required to show detailed proof of that information for the mortgage company’s files.

Generally, applicants are required to have good credit histories, but at the extreme — NINAs (no income verification, no asset verification) — they need not document much of anything when qualifying for a mortgage. The allure of such mortgages for lenders or brokers: They come with higher rates and compensation.

No Documentation Mortgage Loans
One type of No Doc Loan is the “NINA” loan, where no income or asset information is provided or verified. If you can verify liquid assets, I would suggest you apply for a Stated Income Verified Assets loan or a No Ratio Loan which offer better rates.

The NINA loan approval is based on down payment, credit history, and property value. This program still requires “employment” documentation of your past 2 years, while others do not. No Doc, “NINA” , loans may go to 100% loan to value or 10% down/equity depending on credit scores. The standard credit scores needed are above 660.

No Income No Asset Programs: (NINA)

(Homes, 2 to 4 Units*, Condo High Rises, Jumbo Loans)

95% to $1,00,000

90% to $1,300,000

No Income, No Asset, No Employment: ( No Doc ) These loans have No Verification of Employment, Income, or Assets Loans and are available on 6 mo adjustable, 2, 3, 5, & 7 year fixed ARM’s. A 15 & 30 year fixed rate is also available. For No Doc 100% financing, you’ll need credit scores above 680 although some programs go as low as 660.

95% up to $1,000,000

90% from $1,000,000 to $1,300,000

The above program requires a minimum of 5%-10% down or equity when job is not verified up to $1 mil outside of CA.

New 90% No Doc up to $1,000,000 SFR Primary Residence ( 720 credit score for 90%, 680+ for 90%)

New – 90% No Doc with Assets up to $750,000; Assets verified with no verification on you job or income.

Program Highlights

3 year, 5 year, 7 year & 10 year interest only payment option on 3, 5, 7, & 10 yr Fixed Adjustable Rate Mortgages. (credit scores over 660) ; 1 month adjustable & 1 yr fixed ARM/s now available too.

Talk with a broker, a broker underwrites for many company’s so they only have to pull credit 1 time, and they (lenders) look at that credit report. . A single lender (not a broker) has programs available, but they may not be able to help you and your situation, so you go elsewhere, and than that person pulls your credit (see what I mean.) If you shop, your credit is pulled and that is considered a soft pull, for a 30 day period. Just like shopping for a auto, it is good for 30 days. If you apply for a credit card, that is considered a “hard” pull and it drags down your credit score. When looking for a home &/or refinancing, please do not apply for a credit card, Department Charge Card, Gasoline Card or make any major purchases, like a auto, etc. This will pull your credit down.

By the way, a loan application is called a 1003, and they will issue you a GFE (Good Faith estimate, with-in 3 days, that is per the RESPA laws, and the TIL (Truth in Lending). The GFE will tell you the up-front closing cost associated with your loan. The TIL will tell you the terms, rate associated with your loan. This is a estimate only – not the final – but it does help you figure things out

Mandy asks…

Exactly how can the federal govt. nationalize a federal student loan program?

Stafford student loans are federal loans.
The federal government took over a federal government program.

John answers:

They can save a TON of money by providing the loans directly, rather than paying banks to provide the loans.

George asks…

Best loan programs for First Time Buyers – So California?

Looking for the best first-time buyer programs out there for mortgages – either IO 30 yr or 5/1 ARM. I have excellent credit – over 800. Looking to put zero down.

Been also looking into internet back programs such as ING Direct and I see that B of A has a no points/no closing cost program. Anyone have any experience with these as well? Would love any insight anyone has.


John answers:

My Community programs are good for 100% financing, but if you have 800 credit you can get a 100% loan basically anywhere with little documentation. The B of A no closing cost program and any no closing cost program for that matter are all a marketing gimmick. The rate you get will be much higher than what you qualify for so that the costs can be paid from the yield spread from giving you that higher rate. If you plan on keeping the home for more than 2-3 years you are better off paying the closing costs yourself because of the money you will save from having a lower interest rate. You might consider breaking the loan into a 1st and 2nd mortgage to avoid the PMI, but since PMI is now tax deductable it is really not that big a deal and by taking it you don’t have the 2nd mortgage at the higher rate. I am licensed in Califirnia and would be happy to help if needed.

Thomas asks…

Difference between a Saving & Loan[(Thrifts)WAMU] and Commercial Banks?

What the differences? Everytime I read the news nowaday when they discuss WAMU, it mentions that it was a S&L. WAMU seems like a regular bank to me? Any advantages or disadvantages?

John answers:

Once upon a time a “Savings and Loan” was a consumer oriented (and sometimes consumer owned company that took in deposits and made long-term loans to home-owners.

A commercial bank also takes in deposits and makes loans but they are not limited to personal real estate. Then the rules were relaxed. And we had the Savings and Loan crises. And now this.

There is now much less of a difference. S&L’s are now covered by the same FDIC depository insurance as bank depositors are. The insurance program for the S&L used to be separate but went bankrupt.

One of the things put into place after the bank failures of the 1929 depression was rules that didn’t allow banks to be stock brokers. Once that was relaxed by various administrations our risk went up.

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