Refinance That Home Equity Loan
September 30, 2008
You know how much refinancing can do for you in your financial life. Well, now you can convert those savings over to your home equity loans as well. Refinancing those home equity loans can really help you save some serious money. The following are some of the things that you can do if you decide that now is the time for you to save some money. Home equity loan refinance can be yours if you truly want it. Make sure that you take your time and know what you want. Just blindly entering into this process can be more trouble then it is worth. Take your time and see to it that you can the desired result.
Lower Interest Rate
This is always the same no matter when or what you try to refinance. You need to refinance home equity loans if you feel like you can get a lower interest rate. If you are going to refinance but get a higher interest rate, then you probably should not go through with it. The best way to save yourself some money is by lowering that interest rate to a more manageable rate. Hopefully you did not rush the beginning of this process and get to the point where you agreed to home equity loans with a bad interest rate. That could be trouble.
Shorter Loan = More Equity
If you want to gain more equity on a refinance, then you should look into obtaining a shorter term loan. A shorter term loan will help you manage better because you do not have to worry about a ton of payments. Plus, anytime you can help yourself by being able to gain more equity then you should, do it. Equity is only good when you can use it, so if you want to use it now then you should look for ways to gain more of it quicker. Find out more on how converting your home equity loan to a shorter loan could gain you more equity later on.
Adjustable to Fixed
Another thing that you can do to help yourself is by converting your adjustable rate to a fixed rate. This is something where you can have an opportunity to just convert some of the home equity loan, and not the entire thing. This is a way to refinance and help yourself gain a more stable interest rate. If you are looking to plan a budget better, or even make a budget, then you will want to do so with something you can count on. A fixed rate can be counted on more then an adjustable rate. That is why you can look into it.
No TagsDaily Aid 16: The Coming Financial Aid Crisis, Part 1
September 30, 2008
Daily Aid 16: The Coming Financial Aid Crisis
Let’s pull together a few threads quickly.
KSBY said that 8.9 million students filed for financial aid in the first half of 2008, up 16% from the year before. (7,672,000)
Salem, Oregon’s Register Guard reports complete depletion of their state financial aid budget of $72 million, with aid requests up 18%, 7% for traditional 4 year universities and 23% for community colleges.
The Chronicle of Higher Education reports Congress may need to pump $6-billion more into the Pell Grant program next year, an increase of more than 40 percent, to meet its promise of a higher per-student benefit at a time of increased enrollments and tougher economic conditions, an Education Department official has warned.
The New York Times cited government data showing that 800,000 more students had applied for Pell Grants through July than had done so by that point in 2007, and that that could result in a shortfall of up to $6 billion.
Inside Higher Ed reports up to 32% increases in federal financial aid applicants in 2008.
When you sit down and look forward into the future, into 2009, it rapidly becomes apparent that more and more students are applying for and qualifying for financial aid at a time when less aid is available. Appropriations for grants and federal student loans are relatively unchanged, while private student loans (non-government student loans) are less available due to the credit crisis.
Let’s assume that the 16% trend holds. Next year, 10,324,000 students will file the FAFSA if you assume at 16% increase in applicants again, which is not unreasonable given that joblessness has increased and many large companies such as Lehman Brothers have simply gone bust.
If 800,000 extra students can cause a shortfall of $6 billion in Pell Grants, then 2,652,000 extra students will cause a short fall of close to $20 billion.
Put another way, Congress allocated $14 billion to fund 7,672,000 Pell Grants at roughly $1,824 per student.
If increases in qualified financial aid applications spike as predicted, the amount allocated per student drops to $1,356 per student - nearly $500.
For a lot of low income students, $500 is a make or break amount, enough that it will decide whether the student attends college or not.
This is clearly a major problem in the making. In ordinary times, asking for an additional $20 billion for higher education from Congress is difficult at best, because Congress simply places higher education at a lower budgetary priority than other national priorities. However, we’re not in ordinary times. We’re about as far from ordinary times as you can imagine. Congress and the Federal Reserve Bank are spending every available dollar trying to bail out major financial institutions - the money for additional higher education spending simply isn’t there right now.
What you have, in other words, is a quickly approaching financial aid crisis, a college crunch of sorts, that will hit as soon as January 2009 rolls around and the filing window for the 2009 FAFSA opens. More students will be competing for fewer dollars than ever, and there’s a very real possibility that a significant number of students will not get aid even if they’re qualified, because federal aid is allocated on a first come, first served basis.
Here’s the lesson in all of this, in what you must do. Take the time now to start making preparations for filing your FAFSA in January 2009. Apply for as many scholarships as you can, because external scholarship availability hasn’t been affected by the economy yet. Plan to be incredibly aggressive in your quest for financial aid, because you’ll need to be. You’re competing with your fellow students more than ever for fewer dollars.
While I don’t want to encourage panic, I do want you, my listeners and readers, to be wholly prepared for what’s coming. It’s not going to be pretty, but if you’re prepared, forewarned and forearmed, you’ll weather this financial aid crisis better than most.
Update: Read Part 2 of the Coming Financial Aid Crisis.
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FAP877: Wishful Presidential Address on the Economy
September 30, 2008
FAP877: Wishful Presidential Address on the Economy
After a rough ride on the markets, I thought a friendly voice might help a little, and in good fun, this is what I wish our politicians would say but probably won’t.
Click the play button to listen now:
–
Good evening, my fellow Americans and everyone else tuning in, too. Today was a historic day for several reasons. First, your Congress, for the moment, listened to you when you said no to corporate welfare, no to the big bank bailout of 2008. There was an equally historic fall of the markets on Wall Street, which I’m sure the papers will label as something hysterical like financial armageddon.
It is not. This is not financial armageddon. This is not the end of the line for America. Not a single stalk of wheat wilted at the collapse of a major bank. Not a single ear of corn decided to throw in the towel after checking its investments. The sun came up today and it will come up tomorrow no matter what happens on the markets, because the markets are only a small part of America.
There will be impacts to all of this. Some loans will be harder to get in the coming days and weeks ahead. Some more banks will fail, almost certainly. Some more investment firms and other financial services will take a hit, almost certainly.
My friends, what we’re dealing with is essentially poison in the veins of our financial system, poison from irresponsible borrowing and irresponsible lending. Lenders who gave too freely and borrowers who bit off more than they could ever have chewed.
Like any poison, the only way to truly cure what ails us is to let time and nature flush the poison out of us. We can and should do what is practical to lessen the pain, but not at the cost of prolonging the poison, or worse, injecting more poison into ourselves by further borrowing from tomorrow to pay for the mistakes of yesterday.
Banks, businesses, and yes, homeowners, do need to be allowed to fail. This is harsh but true, and again the only way to get the American economy back on track. Flush out the garbage loans, flush out the debts that will never be repaid no matter how many bailouts you try, and reboot, in essence, our financial system.
Once the markets have been allowed to reach bottom naturally and quickly, we can start to think about our prospects for the future. Over the past 25 years, we’ve heard a lot about supply side economics, or trickle down economics, where you allow the wealthiest to prosper and hope that the money trickles down to everyone else. It’s time for trickle up, or grassroots economics, where we do as much as possible to encourage individuals to make smart financial choices and then get out of their way.
The first step in trickle up economics is to immediately make tax free for at least two years any income earned from saving money in FDIC insured accounts. This means checking accounts, savings accounts, FDIC insured money market accounts, and Treasury bills and bonds. We need to encourage and provide economic incentives for more Americans to save money rather than spend it, to reward putting something aside for the rainy days rather than hoping the sun will shine every day. This will also have the net effect of helping to recapitalize banks who need the cash.
The second step in trickle up economics is to mandate financial literacy education at all levels in our educational system. So many Americans made poor choices not out of malice, but of ignorance, of not knowing what they were getting into. If we as a nation are in a spending mood, spending money to include comprehensive financial literacy at all levels of education from kindergarten to college is a wise investment. Millions of Americans can’t balance a checking account and have no idea how to read a mortgage contract, and that fundamental skill gap is a major contributor to our current problems.
From there we need to create jobs. Tax incentives to companies that opt to bring jobs to America are a start, but more important, if we’re going to spend money, let’s invest it in America by building infrastructure and citizenship. If we look to the past, the Tennessee Valley Authority, the Eisenhower Interstate System, the Civilian Conservation Corps, the Montgomery GI Bill that sent 8 million returning veterans to college, all were major forces for creating prosperity out of decay. Investing in our roads, rail, transit systems, investing in our energy infrastructure, investing in our schools will all create jobs but also create a solid foundation for the next generation to build on.
Finally and most fundamentally, the root cause of this entire mess was irresponsible lending and borrowing, but the chief symptom of the problem is too many houses for not enough buyers. We either need more buyers or fewer houses. Some houses currently in foreclosure or bank owned can be bought directly by the government or even private agencies like Habitat for Humanity for rehabilitation.
For the rest, we need to get buyers willing to buy the houses with borrowed money. If the government is in the mood to spend money, then create a program similar to the Federal Direct Student Loan Program, which allows borrowers to borrow directly from the government. The Federal Reserve Bank allows banks to borrow at the funds rate, currently 2%, which presumably is enough to fund the administration of the Federal Reserve. Add in an administrative margin of 2% and create a loan program that allows creditworthy consumers and businesses to borrow directly from the government in the same structure as the student loan program.
The emphasis would be on creditworthiness, and would have a similar screening and verification process that the government uses for allocating financial aid dollars, and while the student loan program is far from perfect, it is better than the alternative of 80% fewer college graduates. If we want to stave off foreclosures, letting borrowers get their properties re-assessed for market rates and get existing mortgages refinanced at government rates may be a good short term fix.
None of these solutions are bulletproof or guaranteed cures, but they’re all better than just handing money to banks and hoping they do the right thing. No matter what happens, keep in mind that the basic goodness of America - the willingness for people to work hard for a better life - remains intact, and as long as we provide a functioning system for them to do it in, we’ll succeed as a nation.
Good night, and may the belief system of your choice bless America.
Disclaimer: political opinions are mine and not representative of the Student Loan Network.
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Daily Aid 15: Financial Aid Questions and Answers
September 29, 2008
Daily Aid 15: Financial Aid Questions and Answers
Last week, I sent out a quick survey asking you what you wanted from the Financial Aid Podcast and blog. This week, we’re going to tackle some of the questions and answers, along with the regular dose of financial aid and student loan news.
Student Financial Aid News
“College students have drained Oregon’s financial aid fund, and lawmakers are being asked to put up $4 million more,” the Associated Press reports. “The state set aside $72 million for aid this year. But when the economy sours, students typically turn to higher education in greater numbers. More than 100,000 Oregon students who need help to pay for college are flooding the state’s campuses this fall.”
Commentary
This is unsurprising, and in fact I’ll probably do a special later this week on the coming financial aid crisis, the one we’re just not talking about yet, despite increasing headlines about it.
Here’s the bottom line: financial aid is now something you do and plan for year-round. It’s not just a form or two in January, but a process for making college as affordable as possible. If you’re committed to paying as little for college as possible, it will require year-round effort.
Always be looking for scholarships. Always file your FAFSA early. Always be looking for more ways to save money, be thrifty and frugal, and still enjoy a great college experience, which has less to do with the name of the school and more to do with who you want to be.
Scholarship Update
Have you signed up for the Student Loan Network $10,000 Scholarship yet?
Click here to apply. It takes 32 seconds, it’s completely free, and it’s a shot at $10,000.
Mail Bag
Wayne writes in:
What private loan lenders are left and what do they offer and to whom? Best, W.
There are still a lot of private student loan lenders out there. Corporate plug, we’re one of them. Generally speaking, the easiest way to see who’s still in business is just to Google for the search term and see who’s still advertising with paid ads.
Here’s what you do need to know - average credit scores in America have declined at the same time that lending standards have risen. Where you might have been able to get a private student loan with a FICO credit score of 620 and no cosigner 2 years ago, today that’s a 720 with a co-signer. Virtually every private student loan out there, ours included, requires a co-signer and good credit.
Are there alternatives for families with less than perfect credit? Yes - check out the PLUS loan, which is a federal parent loan. The credit terms for a PLUS loan are a lot more lenient because the government backs the loan.
Thanks for writing in, Wayne!
Conference/Event
Friend and colleague Maria Koklanaris asked me to pass along this paid teleseminar announcement. Normally, I don’t do ads, but this appears to at least be worth mentioning.
Full disclosure: HEWI hasn’t paid the Student Loan Network or Financial Aid Podcast for this.
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Reminders
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+ Financial Aid Podcast Show Notes at FinancialAidPodcast.com.
+ Free scholarship search secrets eBook at StudentScholarshipSearch.com/ebook
+ Open an FDIC-insured savings account today!
+ Stafford federal student loans at StaffordLoan.com
+ Parent PLUS loans at ParentPLUSLoan.com
+ Graduate student loans at GradLoans.com
+ Private student loans available at any time - visit AlternativeStudentLoan.com
+ Private student loan consolidation at StudentLoanConsolidator.com
+ FAFSA form tutorials and free help at FAFSAonline.com
+ Get FAFSA news at the FAFSA blog
+ 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.
Daily Aid 14: Washington Mutual fails, seized by OTS and FDIC, bought by JP Morgan
September 26, 2008
Daily Aid 14: Washington Mutual fails, seized by OTS and FDIC, bought by JP Morgan
Special Announcement Edition
You’ll probably just wake up to this blog post, since it’s very early morning, 12:30 AM.
Washington Mutual (ticker: WM) has failed due to a massive run on the bank, losing $16.7 billion in deposits in just 9 days.
As of 10 PM September 26, Office of Thrift Supervision seized Washington Mutual and placed it into receivership with the FDIC, making it the largest bank failure in history.
JP Morgan (ticker: JPM) then purchased the assets of Washington Mutual for $1.9 billion.
What does this mean for you?
If you are a Washington Mutual banking customer with deposits at Washington Mutual, your local bank branch will be open for business today and your cash deposits are 100% safe. Not a single penny of deposits was lost.
If you have invested in Washington Mutual stocks and bonds, your investments are unfortunately no longer worth anything.
If you have federal student loans or private student loans with Washington Mutual, those loans are now owned by JP Morgan. Make sure you contact customer service at the number on your Washington Mutual student loan bill to ensure that your correct mailing address and other contact information is up to date, so when JP Morgan assumes administration of your loan, your payments will be received correctly.
Commentary
The long term consequences of Washington Mutual’s failure and OTS/FDIC seizure will not become clear for some time, but in the meantime, it’s really important for me to emphasize these two points:
1. If you have deposited money at a bank and your money is in an FDIC insured account and you are under the $100,000 limit, your money is safe. The same limits are true of credit unions; they’re insured by the NCUA for the same limits. The FDIC has insured and guaranteed every penny deposited at all FDIC member banks, which is virtually every bank in the United States.
2. If you happen to be a CEO, president, or owner of a company, make sure your payroll is within FDIC limits. Businesses got very lucky with Washington Mutual, as JP Morgan will guarantee all deposits, regardless of amount. The next bank failure, you may not be so lucky.
Finally, if you are saving for college or retirement, consult your financial planner sooner rather than later to make sure your investments are diversified and updated to reflect the ever-changing realities of the market. As always, I am not a financial planner or investment professional; please get your investing advice from someone who is!
Did you enjoy this? 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.
+
+
+
Reminders
+
+ Financial Aid Podcast Show Notes at FinancialAidPodcast.com.
+ Free scholarship search secrets eBook at StudentScholarshipSearch.com/ebook
+ Open an FDIC-insured savings account today!
+ Stafford federal student loans at StaffordLoan.com
+ Parent PLUS loans at ParentPLUSLoan.com
+ Graduate student loans at GradLoans.com
+ Private student loans available at any time - visit AlternativeStudentLoan.com
+ Private student loan consolidation at StudentLoanConsolidator.com
+ FAFSA form tutorials and free help at FAFSAonline.com
+ Get FAFSA news at the FAFSA blog
+ 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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