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:: HOME :: CREDIT CARDS :: LONG DISTANCE :: INTERNET SERVICE :: LOANS · Main Page · Auto Loans · Home Equity Loans · New Mortgage Loans · Refinance Loans · Student Loans  Loan Consolidation New Student Loans Tips and Advice Calculators· Lines of Credit · Debt Consolidation · Credit Report & Score · Tips & Advice - New! · Calculators - New! · Loan Glossary · Loan FAQ · Info & Resources :: CELL PHONES :: INSURANCE :: ONLINE BANKING :: KNOWLEDGE :: MORE |
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Loan Tips and Advice Center Topic: Frequently Asked Questions See the questions menu for frequently asked questions about loans. For additional information about loans, see the topic list directly below.
Home Loans (mortgage, refinance, home equity): What is a credit score? A credit score is an indication of your credit history and measures your ability to repay a debt in the future. It is a "track-record" of your payment performance to date. ^ Back to the Question List How long is credit information reported on my credit report? Information is reported for up to seven years, however bankruptcy information can be reported for up to 10 years. ^ Back to the Question List Which is better a fixed or adjustable rate? A fixed rate mortgage stays the same for the entire length of the loan, while the interest rate of an adjustable rate mortgage changes with the market over time. Although an adjustable rate mortgage might offer lower payments initially, if rates go up, your payment will, too. ^ Back to the Question List How can I find the best interest rate? Shop around. Compare both interest rates, annual percentage rates (APRs) and terms. Even a .25% difference in rate can add up to big savings, over time. ^ Back to the Question List Should I choose a home equity loan, or a home equity line of credit? What is the difference? A home equity loan is a lump-sum of money you receive. The loan generally has a fixed interest rate, which is usually slightly higher than a first mortgage interest rate. You start making payments on the loan as soon as you receive it, and once you pay it off, it's gone. On the other hand, a home equity line of credit (HELOC) generally has a variable interest rate, sometimes with a pre-agreed ceiling or "cap." You only access as much as you need, and make payments only on that amount. You can use the funds, pay them down, and then use them again. You only make payments, when you have drawn on the loan, and those payments are based on the interest rate at that time. The funds are generally available to you for a certain term. At the end of that term, if there is anything outstanding, you can either pay it off or roll it into another loan. ^ Back to the Question List Will one late credit card payment or loan default disqualify me from getting a mortgage? Late payments (especially those under 30 days) should not automatically disqualify you from getting a mortgage. Almost everyone at one time or another has forgotten to pay a bill on time, or has had trouble making a payment - mortgage lenders know this. ^ Back to the Question List What is the difference between APR and interest rate? The APR (annual percentage rate) reflects the cost of your mortgage loan as a yearly rate. It also incorporates the fees incurred to obtain the loan, such as discount points and loan origination fee. The interest rate is the rate which is charged or paid for the use of money. An interest rate is often expressed as an annual percentage of the principal. It is calculated by dividing the amount of interest by the amount of principal. ^ Back to the Question List What are the pros and cons of getting an Adjustable-Rate Mortgage? In general, when interest rates are high, adjustable rate mortgages are more favorable to borrowers. When interest rates are low, fixed rate mortgages are better. Other pros and cons: · Adjustable rate mortgages may be assumable; conventional fixed rate mortgages generally are not. · If you plan to sell in the near future, an adjustable rate mortgage is usually best because you pay a lower rate at the beginning of an adjustable loan. Therefore, you'll spend less money in interest expense for the short time you own the house. · No one can predict the future. If interest rates suddenly rise and stay there, you risk higher monthly payments for a significant period of time with an adjustable loan. Conversely, if interest rates drop, you will benefit by having an adjustable rate loan. ^ Back to the Question List How can a shorter term save me money on a Fixed-Rate Mortgage? By opting for a shorter term, you can save thousands of dollars in interest expense because you'll be paying off the loan sooner. Although your payment will be more each month, it may not be as much as you may think. ^ Back to the Question List Is there a minimum income level to qualify for a mortgage? There is no set minimum income requirement for mortgage qualification. ^ Back to the Question List How will I know whether I need Private Mortgage Insurance (PMI)? In most cases, if your first mortgage amount is greater than 80% of the property's value, the lender will obtain Private Mortgage Insurance (PMI) to safeguard its investment against the possibility of default. PMI premium is collected monthly along with the monthly payment. As your equity increases, you may qualify to have PMI removed. ^ Back to the Question List What are the reasons people refinance their home? You can refinance your home to lower your monthly mortgage payment, to consolidate debts, to convert some of the equity in your home to cash for other purposes (such as college tuition or remodeling your home). Note: Refinancing will cost you in loan fees and title insurance. ^ Back to the Question List Why would I get a home equity loan? If you have a great mortgage interest rate and don't want to refinance your existing mortgage, a home equity loan might be the way to go. It is a second loan that you take out in addition to your first mortgage and allows you to get cash from your home's equity. You might use this lump sum for home improvements or paying off high-interest credit card debt. ^ Back to the Question List Student Loans: What is a deferment? A deferment is a temporary stopping of interest and/or principal payments on a student loan. All deferments must be applied for and approved before they go into effect. The deferment periods have different lengths, and all require some form of documentation before they will be approved. ^ Back to the Question List What is a Federal Consolidation Loan? A Federal Consolidation Loan is a loan that repays some or all of your outstanding eligible federal student loans, and replaces the multiple payments you may be making each month with a single student loan payment. ^ Back to the Question List Why should I consolidate my student loans? Federal student loan consolidation offers you the opportunity to fix your rate for the life of your loan, and take advantage of interest rate reduction programs that can dramatically cut your monthly loan payments. ^ Back to the Question List What if I have already consolidated my student loans? Can I reconsolidate to lock in the lower rate? If you have already consolidated your student loans, the Department of Education has ruled that you cannot reconsolidate unless you either received a new eligible loan since the consolidation or have left an eligible loan out of the original consolidation. ^ Back to the Question List I'm still in school. Do I need to wait until I graduate before I can consolidate my student loans? Not necessarily. If you are in graduate school, you can consolidate your undergraduate school loans. If you're in a post-graduate program, such as medical school or law school, you can consolidate your undergraduate and graduate school loans. If you have already consolidated your undergraduate loans, and are about to leave graduate school, you may be eligible to consolidate both undergraduate and graduate loans into one payment. ^ Back to the Question List How is my interest rate calculated? Interest rates for student loans are fixed rates, set every July 1 by the federal government. ^ Back to the Question List What loans are eligible for student loan consolidation? · DSS - Direct Subsidized Stafford Loans · SS - Subsidized Federal Stafford Loans & Guaranteed Student Loans (GSL) · DUS - Direct Unsubsidized Stafford Loans · DPLUS - Direct PLUS Loans · DUCON - Direct Unsubsidized Consolidation Loan, including Direct PLUS Consolidation Loans · US - Unsubsidized and Non-Subsidized Federal Stafford Loans · NSL - Federal Nursing Loans · HEAL - Health Education Assistance Loans · PERK - Federal Perkins Loans, formerly Nations Defense/National Direct Student Loans (NDSL) · PLUS - Federal PLUS (Parent) Loans · SCON - Subsidized Federal Consolidation Loans · UCON- Unsubsidized Federal Consolidation Loans · SLS - Federal Supplemental Loans for Students (formerly Auxiliary Loans to Assist Students (ALAS) and Student PLUS Loans) ^ Back to the Question List Debt Consolidation: How do I know if debt consolidation is for me? Also, is it safe? Take the time to explore what's available and decide upon the best course of action for you. Also, check to make sure that the debt consolidation company you want to deal with has a good record with the Better Business Bureau. Stay clear of companies that fail to offer you a free consultation. You want someone who will thoroughly discuss your financial situation, needs and options. Do not give your business to companies that charge large, up-front fees to set up or manage the financial option you choose. ^ Back to the Question List How will a debt management program help me? A debt management program is a proven plan to get you out of debt. It allows you to make a single monthly payment that is distributed to your creditors. This eliminates the need to make individual payments to each of your creditors. ^ Back to the Question List How will a debt management program affect my credit? If your credit report already reflects any late or missed payments, then the debt management plan (DMP) will likely improve your record by facilitating consistent, on-time monthly payments. Also, if you were late in the past, many creditors will report you as "current" as long as you make all of your monthly DMP payments on time. ^ Back to the Question List How much will the debt management program cost me? Your costs may vary based on state regulations and the number of creditors you place on the program. Clients typically pay a nominal set-up cost to cover the expense of account activation, and a monthly servicing cost to cover recurring expenses. ^ Back to the Question List
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