Your Questions About Save Loan Program

Mandy asks…

Mortgage Loan help! Please?

Ok. We(my fiance and myself) are trying to buy our first home. We are EXTREMELY new to the whole mortgage process and really what it all means. I’ve read numerous sites and it still confuses me. Are we supposed to find a realtor first and then apply with a mortgage company? Or is it the other way around? And how do you “research” different mortgage companies rates? And someone PLEASE tell me what in the world “Points” are and what they have to do with mortgage loans. All of this is so confusing and stressful at the same time. Due to a death in the family and problems that followed shortly after we have 3 months to find a home and the time constraint makes all this even worse then it would be if we had tons of time to look. We want to find a forever home but not lose our minds in the process. Any and all help is GREATLY appreciated,and thanks again= ) Happy New Year

John answers:

Points are 1% of the loan or sale price of the house. If your mortgage loan was for $100,000, 1% would be $1000. Thus if your lender charged you 1.5 points this would come to a total or $1,500 for the cost of your mortgage loan.

Buying a house is a step by step process, this is the first step you should take in order to purchase a house. The rest of the steps will fall in place, no matter the type of property you are purchasing.

In order to find out the type of loan programs you are qualified for you will have to fill out a loan application, with a mortgage broker, which you can find one in your local telephone book.

Make sure this mortgage broker or mortgage banker is able to do government loans such as FHA and VA loans if you qualify for one. With a VA mortgage loan you are not required to have a down payment, this will save you on closing cost.

He will fill out this application, which takes awhile so grab your favorite beverage and sit down. Once you have completed the application, he will run your credit report which will have your credit scores. These credit scores will determine your interest rate.

The amount of your monthly debt payments you are required to pay as per your credit report and the amount of mortgage you can take on based on your income will determine the amount of house you will be able to purchase.

When you speak with the mortgage broker you will need the following documents to complete the loan application, there will be others, but this will get you started.

#1 One month of pay stubs for each person that will be on the mortgage.

#2 Six months bank statements from each bank in which you bank as well as statements from any 401K from you place of employment.

#3 Two years of federal income tax along with the W-2 that match.

Once he has all that he need to do he can then issue you a pre-approval letter so you can purchase a home. In this pre-approval letter will be the amount of house you are qualified to purchased.

Once he gives you this pre-approval you may now find a real estate agent to find yourself a home or he might have a referral.

Now make sure before you get your pre-approval you and your mortgage broker go over all your options as to the mortgage programs you qualify for, the interest rate, monthly payments.

If you are getting a FHA, fixed rate, two loans to eliminate PMI like an 80/20 or one loan, if you are qualified for and approved for a 100% loan.

You should select the loan that best suit your financial condition at the time. That could be an adjustable rate loan. It could be a fixed rate loan for 5 or 10 years and then adjust. Some adjustable rate mortgages only adjust once.

Make sure your mortgage broker explain all your options so you may make an intelligent decision.

What might be good for one person might not be good for you, in other words just because your friends and all your real estate buddies are telling you about the great fixed rate they got, your financial situation might call for something else.

So select the best option for you and your financial situation.

You should also get a Good Faith Estimate (GFE) which will indicate the cost you will have to pay for getting this loan. It will also indicate the amount of your down payment.

Once you have found a home the real estate agent will then prepare a contract for you and the seller to sign.

Your mortgage broker will now order an appraisal to show proof of the property value.

The mortgage broker might ask for additional information or documentation, don’t get all up tight this is normal, just supply the information or find the documents needed.

After the appraisal has been completed you will be called by your mortgage broker to sign your loan docs so you can take possession of your new home.

Before signing any loan docs make sure they say exactly what you and your mortgage broker went over when you decided on what mortgage program was best for you.

I hope this has been of some benefit to you, good luck


Mary asks…

Paying back student loans..?

I heard that if you open up student loans, but end up working for the government or something like international relations and diplomacy, you don’t have to pay those loans back.. Is it true??

John answers:

There are programs that forgive student loans after ten years of qualified service.

The thing is, you’ll have to make payments for all that time, and the interest will rack up for ten years. I’m not sure you would actually end up saving much money, unless your student loan is massive.

More info at link below. Good luck.

Betty asks…

How much should I borrow in student loans?

So I have the option of borrowing an subsidized Stafford loan for college. I figure out all my finances and I know exactly how much I will need, but there is always the opportunity for unforeseen circumstances to throw off my budget. So if I borrow more than I need and don’t actually use it can I give it right back interest free?
I have a job now and that did not answer my question. They offered me more than I need. But I do have the option to take less. So let’s say just as an example. They offer me $1,000 and I only need $800. Can I accept the $1000 and if I don’t need the extra $200 can I just give it back interest free since it is a subsidized loan?

John answers:

The Federal government subsidized Stafford loan is the best, as it does not start to accrue interest until after you have graduated with your degree or withdrawn from the program of study or drop below half-time enrollment. With Stafford loans (perhaps one loan taken out each year you are in college/univ.), the loans can be consolidated for just one payment when re-paying the money. Plus, the date of starting the loan re-payment will be several months after you are done with college/univ.

Information in this article from the well-respected publication US News and World Report, states no college/univ. Student should take out a loan (or a combination of loans) for more that $5,000 each year:
(Note: The full article is 2 web pages long.)

If, after you have received the loan money, and if you find you do not need the entire amount, you may be able to re-pay the amount to the lender, without any penalties. You will need to contact the lending agency and talk with a loan counselor about that.

Please be sure to read the info in this web page, through the FAFSA web pages, regarding Stafford Loans:

You can also choose to hold onto (save) the unused loan money as a financial back up to use for additional unexpected higher education expenses during the school year or apply the unused loan funds to expenses in the next year of your schooling (which may then either eliminate your need for another loan to help with the next year expenses or at least reduce the amount you will need in loan funds.)

Best wishes

Sandra asks…

Sallie Mae Federal Student Loan Lenders?

I am participating in the FEFL loan with Sallie Mae, and I have a choice of lenders, which one is the best (out of the following) and why?
Sallie Mae Education Trust
AMS Education Loan Trust/Wilmington
Student Loan Funding
Fifth Third Bank
Regions Bank

John answers:

Your child should apply for a Stafford loan in the late spring or early summer before heading off to college because processing the loan can take four to six weeks. When the school participates in the Federal Direct Student Loan Program, you don’t have to scout around for a lender — the school’s financial-aid office will tell you how to apply.

If you have an FFEL Stafford loan, you can choose your own lender. The interest rate and loan terms will be the same just about anywhere you go, although it’s possible to find a lender offering slightly lower fees to attract more student-loan business. The differences aren’t huge, so it doesn’t pay to spend a lot of time shopping for a lender, but checking with a few might save you a little money down the road.

If you want to trim your child’s costs in repayment, look for a lender that sells its student loans to Sallie Mae. The Student Loan Marketing Association, aka Sallie Mae, is the largest buyer of student loans on the secondary market (where banks sell their loans to raise additional money to lend). Sallie Mae owns about one-third of all student loans. In order to make its packages of student loans most appealing to investors, Sallie Mae offers incentives for student borrowers to repay on time, including:

* A one-fourth-percentage-point break for setting up automatic loan payments from a bank account, and

* A one-percentage-point break in the interest rate after you make four years of on-time payments, which is effortless with automatic debits.

The total savings on a $17,125 balance (the most a graduate who finishes in four years can borrow) over the standard ten-year term could be more than $1,700. To find a bank in your state that sells its loans to Sallie Mae, call 800-891-4595 for the free brochure “Borrowing for College.” Or visit Sallie Mae’s Web site.


Good Luck…

Donald asks…

Student Loans?

I’m applying for a subsidized Stafford loan. Which lender should I choose?

John answers:

The only difference from lender to lender under the Stafford loan program are the borrower benefits or incentives.

Because the loans are federally guaranteed, the interest rate is the same no matter what lender you go with, so lenders develop special benefits for borrowers who choose them. These benefits may come in the form of interest rate reductions, origination fee waiver, or reduction of the principal balance.

Each lender may choose different benefits to offer to their borrowers. Carefully examine the benefits each lender offers to decide which one is likely to save you more money in the long term.

It is also important that you look into how a lender handles and services their loans. Issues like customer service can make a big difference in whether or not you are happy with your lender. Does the lender service their own loans? Or are they serviced by another company? Does the lender make a practice of “selling” the loans to another lending institution? (If the lender does this, it can be confusing and frustrating to switch to a knew lender without having given consent).

If you still have questions, try narrowing it down to your top 2 or 3 lender, then call their customer service lines to ask for detailed information that may not be provided up-front in publications. Ask after how many days late you lose your benefits, how much you can expect to save in total over the life of the loan, or if they make a practice of selling their loans.

You can also speak to your loan advisor in the Financial Aid Office, but they will not be allowed to recommend a particular lender. We are required by federal regulation to be completely neutral on lender selection, but can provide factual assistance and guidance.

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