Loan Modification Companies Can Be a Big Help

If a homeowner under financial hardship is considering applying for a home loan modification, it might be a good idea for them to look into hiring a loan modification company to take care of the negotiations.

Loan modification companies mediate between the borrower and the lender to reach an agreement on an acceptable interest rate and monthly payments.

Under the new Home Affordable Modification Program, there have been several changes to the loan modification process that have made loan modification easier to reach than ever. But there is a difference between being able to reach and being able to obtain it.

loan modificationLenders work around the criteria set by the Home Affordable Modification Program and create their own specific guidelines for loan modification eligibility. Some lenders are more difficult than others eligibility-wise.

The qualification guidelines per lender are based around the homeowner/borrower’s home value, income, circumstances of hardship, bankruptcy history, credit, and even late payments.

The late payment qualification variations are notable in cases where the homeowner has tried to scrape together enough money each month to pay the mortgage and barely lived on a mere few extra dollars a month.

In those cases, lenders who will only accept homeowners who have made a late payment or two completely toss those close call cases to the side.

A loan modification company can make sure the homeowner’s plea for assistance does not merely get tossed to the side.

A loan modification company can ensure that the borrower’s rights are upheld to the standards of the Home Affordable Program and see to it that the homeowner gets the reductions that they need.

While it is possible for a homeowner to take on the task of applying and negotiating a loan modification with his or her lender on their own, the chances of success are low.

Even with the incentives the administration is offering lenders, they are not completely open to accepting loan modification applications as those incentives either do not cover the amount they lose on interest reductions or are not available to them in the long run.

It is important for a homeowner to be aware that there are several loan modification scams out there running under the guides of loan modification companies. If a homeowner receives any form of solicitation claiming to be able to help them solve their mortgage woes, it is a scam.

A legitimate loan modification company does not seek out homeowners and solicit their business. There are also scams that require an up-front fee for consultation or negotiation, which is also fraudulent.

If a homeowner falls for one of these scams, little or nothing will be done for them and they will undoubtedly lose money they thought they were using to help them, not to harm.

Finding the Best Private Student Loans Regardless of Need

Private student loans are commonly referred to as alternative student loans, but whichever they are known as to you it is important to know right off the bat that private loans should be the last source to go to for financial aid money for college.

This is because private loans as the name implies are managed and given by private companies that are in the business of student loans for the money.

Interest rates on private loans are generally much higher than federal loans, and often come with disbursement fees, repayment fees, and even sometimes application fees.

There are, of course, advantages to private loans.

The first advantage is that they are available to anyone looking to fund their college education, regardless of their need.

Another advantage of private loans is that they often have far higher maximum limits per year and per degree than federal loans and grants.

Of course, if you are eligible for federal loans, federal grants, or any money from your school; you need to exhaust those sources first before considering private loans.

The first step in finding a good private student loan is to look beyond your school’s financial aid office.

While some offices are honest and look out for the student, some have been accused of accepting bribe payments from private loan companies to service and promote a certain higher interest loan or fee laden deal.

Many companies are available by searching the internet, asking fellow students, or a trusted financial aid officer at your school.

The next step is to narrow down the list by looking at critical fine print information such as disbursement fees, repayment fees, and of course interest rates.

Disbursement fees are charged (applied to your total) whenever a loan is sent as a check to your school or to you.

Keep in mind that private loans sent directly to the student often carry higher disbursement fees then those sent to your financial office; after all their charging a bit more for the convenience of having the money directly in your hands (if this sounds like a credit card company move, don’t be surprised a lot of banks service cards as well as student loans).

Repayment fees are paid when your loan is in repayment and you want to look for the lowest fees possible of both disbursement and repayment fees.

More reputable companies often waive or reduce these fees if done through a school financial aid office but again be careful if your school’s financial aid office seems to be hawking pricey loans.

Interest rates are the next thing to consider.

Many loans come with interest rates that can change at any time for pretty much any reason, so you’ll want to find loans that either have fixed rates or have an option to consolidate after college.

Shop around to find which loans have overall lower rates.

You can also get lower interest rates based on your credit history, although since many students are younger and may have no history, you may end up with a rate more likely to be given to someone with bad credit.

Getting a cosigner such as a parent or close relative is always an option and most loan providers will offer lower rates to loans that have cosigners on them.

But before you convince someone to be your cosigner keep in mind that once the person signs the agreement, they are just as responsible for the loan as you are.

That means if you don’t finish school, can’t pay the loan, or refuse to pay the loan then that person will be on the hook for the bill.

Due to this risk, many people are unwilling to cosign and if you are being considered as a cosigner then think long and hard about the decisions, don’t be guilt-tripped or bribed into signing on the dotted line.

Be sure as a potential cosigner that you ask yourself if you could afford this financial risk if the student defaulted on the loan, consider if the student is likely to finish college, and consider if they’d ever do the same for you.

Remember to shop around and look at differences in fees and interest rates.

Also, don’t be discouraged if you get turned down for a loan, there are always other loan providers out there and options such as finding a cosigner exist for getting approved for the loans.

Remember to also consider the maximum amount that can be borrowed each year and for the life of the loan; if you are looking for graduate or professional school loans the amounts may vary and you may get more money per year.

And of course, remember that private loans are not free money, you should exhaust all other sources of financial aid before applying for private loans, this is money you’ll have to pay back plus interest so it should be used as a last resort and only for education-related expenses (tuition, room and board, books).

Credit Score: Questions Every Responsible Newbie Wants Answered

When and how do I get a credit score?

credit score questionsA credit score is generated for you six months after something is reported under your name or social security number.

Credit cards and loans are the most common things reported to the credit bureaus.

Utility bills are generally only reported to the credit bureaus when you are delinquent on payments.

Lenders like to see at least three years of credit history before you will be considered a legitimate borrower.

How do I get credit if I don’t have credit?

Students are in the best position to get credit without having credit. Before the Credit Card Act of 2009, student credit cards were passed out like candy to any and every student that was at least eighteen years old.

Students now have to be twenty-one or prove that they have a way to pay back what might be owed.

If you are a student, student credit cards are still the best place to start. Students may also find a student loan listed on their credit report: some student loans are not listed on the credit report until it is time to repay the debt.

Regular people should first try obtaining store charge cards. A store charge card will not have the little Visa or MasterCard symbol you may see on your debit card or credit cards.

If getting a store credit card turns out to be impossible for you, you should then get a prepaid credit card from your bank. Banks, especially yours, will most likely approve you for a real credit card after six to twelve months.

It is important that you realize that the interest rate on store charge/credit cards and regular credit cards offered to people with little credit will be high.

Does credit cost money?

No, credit is free. You do not have to pay interest on any debt for it to benefit your credit score and history.

For example, your credit card bill can be paid in full each month after you receive your statement.

What is on the statement is what will be reported to the credit bureaus, so it is important that you wait for the statement before paying.

If you pay before the statement is posted, your credit report will make it appear as if your card has not been used.

Can I see my credit report?

By law, you are entitled to a free credit report every year from Experian, Transunion, and Equifax. Your credit report can be requested online at AnnualCreditReport.com.

Viewing your credit score is generally something that must be paid for. There are two ways to see your credit score for free.

When a potential lender or landlord checks your credit, you can ask him or her about your score. The other way is to sign up for a credit monitoring free trial and cancel the service before payment is required.

What is piggybacking?

Credit piggybacking is when the authorized user of a credit card has the card’s history reported to the credit bureaus, which usually results in good credit being gained without actually having a credit card.

It is called piggybacking because you are basically riding on someone else’s financial success.

People have learned to take advantage of this system and the credit bureaus are aware of this. Despite its abuse, piggybacking is still an option for people with little or no credit.

Credit bureaus have made small adjustments to the system: it now takes longer for piggybacking to benefit the authorized user.

The good and bad of the card’s history will go onto the authorized user’s report, which is why you should only ask to be an authorized user on the credit card of a person you know is financially responsible.

If things do go wrong for you as an authorized user, you can be removed from the card and the history will disappear from your report.

Authorized users are not responsible for repaying any debt incurred on the credit card.

Credit Monitoring Services 101

credit monitoringEarlier this year, with the click of the mouse, I became a victim of identity theft.

I simply logged on to Bank of America’s web site, opened a new account, transferred $100 from an existing account, and ordered a box of checks.

Then I waited patiently for my introductory information to arrive in the mail.

One week went by and then two. Finally, I called the bank and learned that the checks were sent to an old address.

To make matters worse, charges had been incurred against my opening deposit from a cellular phone company.

Fortunately, unlike many other victims, it only took me a few phone calls and a police report to clear up the problem.

Nevertheless, this opened my eyes and sparked my interest in credit monitoring services. This article covers the benefits, costs, and companies offering this type of service.

The best advantage of subscribing to a credit monitoring service is that you are alerted on a weekly basis via e-mail, snail mail, or text message when any major changes affect your credit.

This includes credit inquiries, the establishment of new accounts, or address changes.

This instant alert service allows you to detect errors fairly quickly as opposed to waiting until an application for credit has been denied.

You also get, depending on the level of service you purchase, unlimited access to your credit score and report.

Other perks include regular tips and information on how to improve your credit. Some services also provide identity theft insurance up to $25,000.

There are two levels of credit monitoring.

The first is single bureau monitoring, which means you only receive information on your credit report from one of the three major bureaus.

The second option is three-bureau monitoring which provides you with access to your report from all three bureaus.

The latter is the better option because there is no guarantee that personal account information is reported consistently to all three bureaus.

In fact, it is not uncommon to have some information show up one bureau’s report and not the other.

Credit Monitoring Services are offered by True Credit (http://www.truecredit.com), Identity Guard (http://www.identityguard.com, and Equifax (http://www.equifax.com).

Fees for credit monitoring services start as low as $99 a year.

This can be paid in one lump sum or on a monthly basis. All three companies provide you with the option of selecting single or three-bureau monitoring.

Fight Identity Theft also (http://www.fightidentitytheft.com) provides a more detail comparison of the services available from these three companies.

Many banks are promoting credit-monitoring services to existing customers.

For example, SunTrust has arranged for discounts for its account holders through Equifax.

You can also go directly to the web sites of the credit bureaus to learn more and sign up for service.

According to the Identity Theft Resource Center (http://www.idtheftcenter.org), identity theft remains the #1 concern for consumers contacting the Federal Trade Commission.

A relatively easy crime to commit, victims often spend an average of 600 hours over a period of years disputing unauthorized accounts.

Credit Monitoring Services provide an extra level of comfort against fraud and give consumers more control over their financial information.

10 Ways to Save College Funds for Your Children

College tuition fee is rising everywhere, and in fact; it has been rising at a much greater rate than any other items.

college fundFor many families, sending children to universities mean a huge financial burden for the family, and for those taking up student loans, they will find themselves heavily indebted before they even find their first job.

This, unfortunately, will become worse in years to come, many are suggesting that university fees could rise to average $40,000 to $50,000 each year easily, and if you adding the cost of accommodation and other costs, they can go up to $100,000.

This is becoming a crisis that many parents are thinking to give up on their retirement money as they have a choice.

The only way is to plan way ahead and start making savings as early as possible to avoid the future financial burden.

1. College Fund is a very good idea

The concept of a college fund is well understood in North America and certain parts of Europe.

Some governments even put in incentives to co-invest into your education funds.

The concept is very similar to your retirement fund; most people use mutual funds as a way to put regular savings into a college fund.

One thing to remember is, college fund is a very long term investment, usually 10 to 15 years; you need a balanced approach — it is a good idea to mix them with stable and more aggressive investments; and not entirely on cash or stable investments as you do need to beat the inflation as college tuition fees do rise above inflation rate.

2. One share a year makes a lot of difference

Buying one share for your children at their birthday or Christmas.

I read a story where a grandmother used to buy one share a year for her birthday, over 14 years, she had accumulated wealth of $7,000; however, she had sold her shares every year in exchange for cash, had she kept them, it would worth $44,000, enough for her to pay off her college.

There are many companies now offering this kind of service, and you can choose a variety of companies to invest – they will also send you a share certificate, so it is a perfect way to teach your kids money-sense at the same time.

3. Open High Interest Kids Accounts

Some banks offer excellent interest rates for kids’ bank accounts.

The best available at the moment is 10%, although there are many restrictions that they can not earn over $400 a year or they will be taxed at a very high margin rate.

Still, saving $400 a year means you can save $4,000 over 10 years simply by parking your money there doing nothing.

To make this work more effective is to link the accounts to your online high interest savings account which are paying around 6% per annum at the moment, so you can accumulate interest both ways.

4. Buy Index Funds Regularly

Index funds are very suitable tools for savings as they are highly diversified by its nature.

Index funds perform almost exactly to the share market index, and as a result, it is low-cost, low-maintenance funds to invest, the low-cost feature makes a lot of difference over the long term.

Index funds are also easy to invest, you do not need to worry about picking the fund manager or the portfolio.

5. Research into different types of scholarships

Scholarships are available at various universities, more so for universities in the USA, Europe and also some parts of Asia. While it is not as common, there is still funding available.

The system works quite differently in the US and Europe; scholarships are funded by Government, large corporations, alumni and foundations. For example, Bill Gates, Al Gore all have their foundations providing funding for scholarships for their universities.

Scholarships come in different ways:

  1. Academic
  2. Sports Achievements
  3. Music, Arts, talent
  4. Innovations and
  5. High achievers which are subject to judgment by the foundations and universities.

6. ETF Funds

I use a lot of ETF Funds for my children’s college funds; I like them for 3 reasons:

  1. Easy to invest, as they are just like shares,
  2. Liquidity, I can buy and sell them within 20 seconds unlike the mutual funds and
  3. Choice, there is a wide range of choice of ETFs to choose from, which I can build them up over time.

7. High Dividend Stocks

For long term savings, dividends will have a more influential role.

As I had illustrated before, imagine a portfolio that generates 4% dividend yield a year on average and grows a modest 5% a year, that equates to 9% return a year already, plus many companies also increase their dividend by around 5% to 10% each year, and this can make a lot of difference after 10 years.

8. Save all your pocket money

Most families have a lot of coins and changes sitting around.

We did a study a couple of years ago and found that on average, there will be around $100 changes sitting in the household at any given time.

This is a complete waste of money and opportunity as you can use them and earn interest or invest them into mutual funds.

We started our first college fund like this way and simply deposit our changes at the end of each month, this has grown to $1,600 already just after 7 months.

9. Considering studying abroad

Why staying in the US? There is no reason why your kids should study in the US. There are many countries in the world that actually offer university at a much more affordable tuition fee.

Many European universities are actually free apart from registration fees; some universities in Asia are also relatively cheap to attend – look at different choices and you may be surprised.

10. Discipline is everything

As you can see, mutual funds, dividend-paying companies, index funds — these are really just the tools. The most important thing is discipline, and the best way to achieve that is “Forced Saving”.

Every family has ups and downs every month, but this should not disrupt your savings plans.

A good way is to set up direct payment to the funds each month so that you allocate a certain amount of funds from your bank account.

I have seen many of my friends now in the mid-30s and still need to pay off their college debt, it also caused subsequent consequences such as delaying their ability to buy their first home.

Debt is a real problem faced by this generation and you can imagine it will be an even worse problem for the next generation.

Do whatever you can for your children to save for their college, even $5000 can make a lot of difference in their future.