What Do Lenders Actually Look For?

November 29, 2007

The best way to get the upper hand on the lenders is to actually know what they look for. That way you can combat them as best as you can. The more you know, the less they can take advantage of you in your search for financial help. So in order to help you, here is what they will look for. Use this in your favor, and make sure you do not let those lenders get you.

A Few Things to Start Off

They want to take a look and make sure that you have a stable income. This is a key on how they can judge if you will pay your loan off. If you have a steady income then they know you are able to hold a job, which is important to them. If you ever lose your job if will be tougher from you to pay off your loan, obviously.

They also take a look at the loan to value ratio. If you want a home equity loan then the lender will want to know how much your home is worth, and how much you want to take out. If you owe $200,000 on your loan, but your home is now worth $400,000, then you are in luck. You essentially have $200,000 until you reach your home’s value. But on the opposite end, if your house has declined in value then you might not be able to borrow much money or any money at all. So, just know that this is something that the lenders will rally pay attention to. Because they do not want you to take out money that will not be backed by your home.

The Most Important Thing!

Your credit history is far and away the most important thing for you to control. This is what the lenders will look for right off of the bat. The, in their option, is the key that unlocks the door to all your credit information. This is how they judge you financially, even though it might not be fair to you. This is also called your FICO score. Your credit score is based off of your credit report. The number will range anywhere from 300 to 850. The higher your number the better.

Here is what is on your credit report:

Personal information: name, address, Social Security number, etc
Your credit history: credit account, money you owe, closed accounts, etc
Credit inquiries you have made
Bankruptcies, foreclosures, default on payments, etc.

Make sure you aim to keep your credit report clean and error free at all times. It is one of the most financially responsible things that you can ever do. Take the extra time, it will be worth.

Additional Resources:

credit history, credit information, credit report, fico score, financial help, home equity loan, social security number, stable income, steady income, value ratio

FAP678: Managing Financial Aid Deadlines, MIT for High Schools

November 29, 2007

FAP678: Managing Financial Aid Deadlines, MIT for High Schools

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Student Financial Aid News
+ Inside Higher Ed: The Massachusetts Institute of Technology’s OpenCourseWare program puts course materials online and makes them available free to anyone — in an effort that has been praised by educators worldwide for opening up MIT materials.
+ On Wednesday, MIT announced a high school version, Highlights for High School, that will put materials online for high schools to use to improve instruction in science, technology, engineering and math. On on Wednesday, MIT announced that it now has 1,800 of its courses — virtually all of them — in OpenCourseWare.
+ Incredibly powerful stuff because it allows poorly funded high schools access to a great curriculum developed by one of the foremost science schools in America
+ If you’re a teacher, there are materials, handouts, videos, etc.
+ If you’re a student, and you want to get ahead in your classes in AP Bio, AP Chem, or AP Physics, this could easily put you ahead of the pack
+ Sample from 7.012, Fall 2004 Mitochondria Function and Production of ATP
+ That, of course, means higher grades, more scholarships, therefore more opportunities to get into more colleges, and possibly fewer student loans
+ Combine with iTunesU and you have an opportunity for academically gifted students who may not have access to the best teachings at their own local school to excel anyway - for free

Scholarship Update
+ Armed Forces Communications and Electronics Association General John A. Wickham Scholarship
+ Deadline May 1 of each year
+ Scholarships of $2,000 each will be awarded to full time students currently enrolled in accredited degree-granting 4-year colleges or universities in the United States. Candidates must be at least second-year college students, enrolled full time as sophomores or juniors at the time of application.
+ Candidate must be a U.S. citizen and working toward a degree in the following or C4I-related fields of electrical, computer, chemical, systems or aerospace engineering; computer science; physics; mathematics; science or mathematics education; technology management; or management information systems. Majors directly related to the support of U.S. intelligence enterprises or national security with relevance to the mission of AFCEA will also be eligible. A GPA of 3.5 on 4.0 scale or better is required.
+ Details at our free college scholarship search site

Focus on Financial Aid
+ Deadlines
+ Financial aid deadlines are hard deadlines - meaning that if you miss them, you can’t ask for more time.
+ Some common deadlines:
+ Early decision
+ The FAFSA - March 1 for many schools and states
+ October 1 - first tuition bills
+ February 1 - first tuition bills for spring semester
+ Federal student loans like the Stafford Loan and the Parent PLUS Loan - your financial aid office may have deadlines. Usually the month before the semester starts
+ Stafford federal student loans at StaffordLoan.com
+ Parent PLUS loans at ParentPLUSLoan.com
+ 6 months after you graduate, your student loan payments start
+ Student loan consolidation at StudentLoanConsolidator.com
+ Just about every scholarship has a deadline
+ How do you keep track of deadlines?
+ Use a calendaring system with reminders
+ I like Google Calendar because it’s fast, easy, free, and powerful
+ Set up deadlines in Google Calendar
+ Quick Add - just type in natural language sentences
+ If you have unlimited SMS, go to settings/mobile setup
+ Add your cell phone into there for SMS/text reminders
+ In settings, make sure you have popup, mobile, and email reminders turned on
+ Tip: store data inside the reminder. For example, if you have to visit a website, include that in your calendar. Phone, email, etc.

Did you like today’s show? If so, please consider subscribing for free to get it delivered to you. Subscribing for free means you don’t have to remember to download it every day.
+ Click here to subscribe for free by email
+ Click here to subscribe for free in iTunes

Direct MP3 file download: MP3 file

Reminders
+ Financial Aid Podcast Show Notes at FinancialAidPodcast.com.
+ Discuss this episode at the Financial Aid Forum!
+ FAFSA form tutorials and free help at FAFSAonline.com
+ Stafford federal student loans at StaffordLoan.com
+ Student loan consolidation at StudentLoanConsolidator.com
+ Private student loans available at any time - visit AlternativeStudentLoan.com
+ The Financial Aid Podcast is a publication of the Student Loan Network.

I want to hear from you! Email me at financialaidpodcast {at} gmail {dot} com, visit http://www.FinancialAidPodcast.com, or call 206-350-1208.

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FAP677: Scholarship Expert Shayla Price Interview

November 28, 2007

FAP677: Scholarship Expert Shayla Price Interview

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Expert Interview
+ In today’s show, I interview Shayla Price, a senior at Southern University and A&M College in Baton Rouge, Louisiana. Shayla has the unusual distinction of earning more than $100,000 in renewable scholarships, effectively paying for her complete education without student loans or a dime of her own money. We discuss the process she used to find those scholarships, her lessons learned, and some innovative ideas for using today’s technologies in a scholarship search that could net even greater awards.
+ I love the idea of a scholarship community and will be expanding on my vision of what that could entail in the upcoming scholarship search secrets e-book, version 4.0, due out in December. It will be free for download.

Direct MP3 file download: MP3 file

I want to hear from you! Email me at financialaidpodcast {at} gmail {dot} com, visit http://www.FinancialAidPodcast.com, or call 206-350-1208.

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Home Prices Show Record Decline

November 27, 2007

In Sept S&P/Case-Shiller Home Price Index fell 4.9% y/o/y, the biggest drop since the data began in 1988 -- but in-line with expectations. It's the 9th straight month of declines. Lower house prices will help to clear out excess inventories (a lot much more than rate cuts).
Here's the money quote from Shiller:
"The declines in the national figure are notable for two reasons. First, the 3rd quarter decline, at 1.7%, was the largest quarterly decline in the index’s 21-year history. And, second, the year-over-year decline posted its second consecutive record low at -4.5%. Consistent with prior 2007 reports, there is no real positive news in today’s data. Most of the metro areas continue to show declining or decelerating returns returns on both an annual and monthly basis.
All 20 metro areas were in decline in September over August. Even the five metro areas that still have positive annual growth rates -- Atlanta, Charlotte, Dallas, Portland and Seattle -- show continued deceleration in returns."
Here's the metro overview:
S&P/Case-Shiller Index Release - September 2007 Index

A FED rate cut won't help this slow process of adjusting prices to economic reality. Banks continue to tighten guidelines and the major mortgage insurance companies AIG, GE are pulling out of providing lenders protection from default on anyone with less than a 620 FICO. Mortgage rates and especially jumbo mortgage rates for prime borrowers are at the best levels in years. These items and the belief by the public at large that prices were irrational will pressure the real estate market for severals years. As an example of the moves that have occured so far. This is from our friends at Sacramento Area Flippers in Trouble

8112 Sacramento StFair Oaks, CA 95628
Total Loss: $390,000
Percent Loss: 33.1%
Asking Price: $789,000Bedrooms:4 Baths: 3 Sq. feet:3501
Listing History:Down 36.9% from $1,250,000 On 2006-04-09Down 34.2% from $1,199,000 On 2006-06-16Down 33.1% from $1,179,000 On 2006-07-15Down 28.2% from $1,099,000 On 2006-09-16Down 33.1% from $1,179,000 On 2006-09-30Down 49.1% from $1,549,000 On 2007-07-14Down 34.2% from $1,200,000 On 2007-08-18Down 1.3% from $799,000 On 2007-10-20Days on market: 594# of Times Listed: 6

11836 Delavan CirRancho Cordova, CA 95742
Total Loss: $323,500
Percent Loss: 32.3%
Asking Price: $679,000Bedrooms:6 Baths: 4 Sq. feet:5600
Listing History:Down 38.3% from $1,100,000 On 2006-09-16Days on market: 434# of Times Listed: 3

6030 Eagles Nest RdSacramento, CA 95830
Total Loss: $300,000
Percent Loss: 33.3%
Asking Price: $600,000Bedrooms:3 Baths: 3 Sq. feet:3039
Listing History:Down 33.3% from $899,000 On 2006-05-25Days on market: 569# of Times Listed: 3

6415 Valenda CtElk Grove, CA 95757
Total Loss: $294,500
Percent Loss: 42.5%
Asking Price: $399,000Bedrooms:5 Baths: 3 Sq. feet:2954
Listing History:Down 27.5% from $550,000 On 2007-06-16Days on market: 161# of Times Listed: 2

11999 Mandolin WayRancho Cordova, CA 95742
Total Loss: $288,000
Percent Loss: 43.2%
Asking Price: $379,000Bedrooms:3 Baths: 3 Sq. feet:2885
Listing History:Down 20.2% from $475,000 On 2007-08-04Down 17.4% from $459,000 On 2007-09-08Down 11.7% from $429,000 On 2007-09-29Days on market: 112# of Times Listed: 3

If a peak at Sacramento, CA wasn't enough look over at Phoenix Flippers in Trouble. When will the bleeding stop? 08, 2011? Make a comment while it's still FREE of charge.

FAP676: Private student loan market issues, job opportunities in a recession

November 27, 2007

FAP676: Private student loan market issues, job opportunities in a recession

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Student Financial Aid News
+ From the Houston Chronicle: First Marblehead Corp.’s (ticker: FMD) stock sank Monday after a Friedman Billings Ramsey analyst downgraded the student finance company, saying there may not be as much cash committed to covering unpaid student loans as people think.
+ First Marblehead helps banks like Bank of America Corp. and JPMorgan Chase & Co. package their student loans into pools and sell them as bonds. The company charges fees for advising on the deals and helping funnel the payments from the students to the bondholders.
+ The prices the bonds command _ and in turn the commissions First Marblehead charges _ are boosted by a nonprofit organization called The Education Resources Institute, or TERI. TERI promises to buy student loans that are in default, which rescues bondholders from losses. This makes the bonds safer and thus more appealing to investors.
+ After Fitch downgraded TERI’s credit last month, Snowling said he reviewed the organization’s finances and concluded it does not have enough cash to buy all the loans that are going to be in default.
+ Much of TERI’s $612 million in cash is restricted, and the organization can only commit $127 million to cover student loan losses, he said. That represents less than 1 percent of the $13.2 billion in loans TERI guarantees.
+ If student loan defaults overwhelm TERI’s cash, Snowling said First Marblehead will have to pledge more collateral itself, which eats into its profit on deals. Plus, the company will securitize fewer student loans and at lower prices because of the heightened risk, he said.
+ What does this mean for you? Private student loan credit requirements are probably going to get a lot tighter. Any time a lender has to buy back loans out of a securitization, it’s a loss, particularly if the loans default.
+ One of the many reasons the Student Loan Network is absolutely adamant about responsible borrowing - never borrow more than you can afford to repay. Everyone loses when you do.
+ In the short term, if the market believes that private student loans are a risky investment, credit available to First Marblehead will be more restricted, the same as is happening in the housing and mortgage markets. That means private student loans themselves will be harder to qualify for, with more rigorous credit checks, higher requirements in terms of credit score, and possibly higher interest rates if the number of loans defaulting spikes, which it may.
+ If you are in danger of defaulting, don’t just sit there. Call your lender and ask to negotiate a payment plan or other means of default aversion. If you have a loan from the Student Loan Network, and you’re in danger of defaulting, call us at 877-328-1565! We want to keep you out of default as much as you want to stay out of it.
+ Remember, private student loans are NOT your first loan of resort for paying for college. Choose federal student loans like those at StaffordLoan.com first.
+ Disclosures: First Marblehead powers our Act Education Loan Private Student Loans
+ I also own one share of FMD stock now worth half what it was earlier this year, about $27.

Scholarship Update
+ IFDA Student Member Scholarship
+ The IFDA Student Member Scholarship is offered to current IFDA student members who have completed four courses in interior design or related field and are in good standing. An additional letter of recommendation from an IFDA Professional Member is required. The student identification number must be included on the application form. The IFDA Educational Foundation will award a $2,000 Scholarship for the academic year to a full time student member.
+ Deadline March 31
+ Details at our free college scholarship search site

Jobcast
+ Evaluating job opportunities in a recession - which is where we’re headed if we’re not already there.
+ Look for companies with strong growth potential - they tend to be smaller rather than larger, more agile, and disruptive, doing something new in their vertical
+ Look for companies that are hiring on big paid job boards like Monster. If they’re willing to shell out cash to hire someone, they’re not at a point where trimming costs includes paid hiring
+ Look for compensation that has a strong base salary component, so that even if the economy trends downward, you still get a paycheck, as opposed to being purely commission-based
+ Look for benefits that will offset high personal costs - strong healthcare is a huge plus in a recession - 80/20 split is standard, but look for 100 less copay.
+ It is perfectly acceptable to ask in the job interview about the prospects for growth and stability - and be on the lookout for incongruent nonverbal communication
+ Look for job opportunities that have flexibility in them; a recession is not a great time to be making a major career change, but it is a great time to focus on training and professional development
+ It is perfectly acceptable to even ask about the financials if you’re interviewing for a management position
+ Obviously, stay away from jobs in troubled sectors like banking, lending, finance, mortgages, housing, real estate, etc.