Many families arrange for the parents to take out the student loan and have their child repay it. Most don’t realize that the student loan can never be changed to the student’s name, and all lower payment, deferment and discharge options are based on the parent’s situation rather than the students. If the loan goes into default, the parents could have their wages garnished, credit ruined, and be taken to court for the full amount.
Parent PLUS loans are federal student loans issued directly to parents that can never be transferred to the responsibility of the student. These loans are intended to supplement school, state and other federal financial aid offered. A parent fills out a promissory note from the school and funds are sent directly to the school and this loan type stays in name of the parent.
You can borrow more with a Parent PLUS loan versus a traditional undergraduate student loan. While federal student loans are generally capped for dependent students at $31,000 for the entire undergraduate degree, Parent PLUS loans are capped by the total cost of attendance minus other sources of financial aid.
Parent PLUS loan rates may be a shock to families. While undergraduate loans to students are currently issued at a rate of roughly 4.5%, rates for Parent PLUS loans are roughly 7.1%. An origination fee is an additional charge on top of the interest rate. The current fee is over 4%. Once issued, interest rates don’t change except for a one-time .25 discount for direct debit.
After a six-month grace period from graduation, the repayment of your Parent PLUS loan begins. The first day after you miss a student loan payment, your loan becomes past due. If you are delinquent on your Parent PLUS loan payment for 90 days or more, your loan servicer will report the delinquency to the three major national credit bureaus. If you continue to be delinquent, your loan can risk going into default.
The consequences of defaulting on a student loan will impact your finances and ability to borrow. These consequences include the following:
Parent PLUS loans are federal student loans issued directly to parents that can never be transferred to the responsibility of the student. These loans are intended to supplement school, state and other federal financial aid offered. A parent fills out a promissory note from the school and funds are sent directly to the school and this loan type stays in name of the parent.
You can borrow more with a Parent PLUS loan versus a traditional undergraduate student loan. While federal student loans are generally capped for dependent students at $31,000 for the entire undergraduate degree, Parent PLUS loans are capped by the total cost of attendance minus other sources of financial aid.
Parent PLUS loan rates may be a shock to families. While undergraduate loans to students are currently issued at a rate of roughly 4.5%, rates for Parent PLUS loans are roughly 7.1%. An origination fee is an additional charge on top of the interest rate. The current fee is over 4%. Once issued, interest rates don’t change except for a one-time .25 discount for direct debit.
After a six-month grace period from graduation, the repayment of your Parent PLUS loan begins. The first day after you miss a student loan payment, your loan becomes past due. If you are delinquent on your Parent PLUS loan payment for 90 days or more, your loan servicer will report the delinquency to the three major national credit bureaus. If you continue to be delinquent, your loan can risk going into default.
The consequences of defaulting on a student loan will impact your finances and ability to borrow. These consequences include the following:
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The entire unpaid balance of your loan and any interest you owe becomes immediately due
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You can no longer receive deferment or forbearance, and you lose eligibility for other benefits, such as the ability to choose a repayment plan
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You lose eligibility for additional federal student aid
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It may take years to reestablish a good credit record
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You may not be able to purchase or sell assets such as real estate
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Your tax refunds and federal benefit payments may be withheld and applied toward repayment of your defaulted loan
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Your wages may be garnished. This means your employer may be required to withhold a portion of your pay and send it to your loan holder to repay your defaulted loan.
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Your loan holder can take you to court
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You may be charged court costs, collection fees, attorney’s fees, and other costs associated with the collection process
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Your school may withhold your academic transcript until your defaulted student loan is satisfied
Are you a parent enrolled in a Parent PLUS loan?
Ok, so you’ve made the decision to put your home up for sale or refinance your mortgage. After looking at websites like Zillow and Realtor.com, you have an idea of what your home is worth but feel it should appraise for much higher. The truth is that you’ll never have full control over what your home will appraise for, but you can take steps to increase your chance of pricing where you need to.
A property’s appraisal value is influenced by recent sales of similar properties and by current market trends. The home’s amenities, the number of bedrooms and bathrooms, floor plan functionality, and square footage are also key factors in assessing the home’s value. The appraiser must do a complete visual inspection of the interior and exterior and note any conditions that adversely affect the property’s value, such as needed repairs.
By preparing for the appraisal ahead of time, you’ll have a better chance of getting favorable results. After all, you want the most money for your home, right? Here are six simple ways to be sure that you get the best appraisal possible so you can enjoy all of the hard work you’ve put into your home.
- Be sure to have any safety equipment installed and working properly. These include smoke alarms, carbon monoxide alarms, and home security alarms, among other things.
- Clean & remove the any clutter. A clean home looks newer and more attractive to appraisers and buyers alike. Clear out the clutter. Wash down the walls and shampoo the carpet. Clean windows, shutters, and screens. Power wash decks, driveways and the exterior of your home.
- Pay attention to the yard. Mow your grass and trim your trees and shrubbery. Consider having dead trees removed, if possible, before your appraisal. Add some color with flowers, and in the winter, be sure to clear all ice and snow from walkways and driveways. Remove clutter from both the front and backyards, including stray toys, bicycles, and lawn furniture. Be sure to thoroughly weed flowerbeds and add mulch where applicable. Houses with high curb appeal receive better appraisals.
- Do some sprucing up. Install new light switch covers, shiny doorknobs or faucets. Replace old light bulbs to brighten a room. Repaint the walls and hang new curtains. Small things don’t add a lot in an appraisal, but they add up—and they also give the entire home the appearance of being modern and updated. Outdated décor can have a negative impact on an appraisal, while a more modern appearance can have a positive impact.
- Mind the $500 rule. Things like damaged tile floors, old wallpaper, a broken door, or an outdated bathroom vanity—usually take hits in $500 increments. As a general rule, it is safe to assume that small issues will take $500 hits in the total home value. If the appraiser finds several of these problem issues, the result can be thousands in lost home value. As a rule of thumb, fix problems immediately that would cost less than $500 to fix. This way you will recover that cost in your appraisal.
- Inform the home appraiser of any home improvements that have done on the home. Be sure to tell the appraiser about any improvements made in the home. New additions, replaced HVAC units, siding, gutters, a new roof, remodeled kitchens and updated bathrooms will all positively reflect on your appraisal.
For a majority of people, buying a home, or any type of real estate, for that matter, isn’t as easy as finding a great property and simply asking the bank for a loan. Obviously, there’s much more to it – especially in this day and age. Today’s mortgage and lending services demand ingenuity and flexibility to deliver customized solutions tailored to emerging markets.
Believe it or not, one of the fastest-growing markets of home buyers is Millennials. For years, it was assumed that they would turn away from suburban home ownership in favor of big city living and, presumably, renting. However, that prediction hasn’t come true: according to recent analysis by Realtor.com, not only are Millennials “taking over” the U.S. mortgage market, they also hold the largest share of new mortgages by dollar volume.
While their timelines might be a little different than previous generations, the fact is that their attitudes are surprisingly similar – and they’re actually buying more homes than you might think. Home ownership is part of the American dream and, at least for now, it certainly seems as though Millennials aren’t looking to change it anytime soon.
New data reveals that Millennials (aged 19-37, specifically) have outpaced both Gen Xers and Baby Boomers in mortgages, purchasing a larger share of them since early 2017. So how are Millennials able to purchase homes, especially when the prevailing thought is that 1) the cost of living is astronomically high and 2) members of this age group are simply bad at saving money?
According to a recent article on BusinessInsider.com, while Millennials may be buying cheaper homes than Gen Xers and Baby Boomers at a median price of $238,000, they’re putting down less money up front (the average down payment by a millennial homebuyer on a mortgaged home was 8.8% in December 2018). Paired with rising home prices, it’s clear that Millennials are taking on bigger mortgages, as a group, in order to put down roots. Their attitudes toward homeownership remain positive – they’ve just taken longer to get there.
Focus Capital can help the Millennial market “get there,” by offering services specifically tailored to the unique needs of this buyer group. Working alongside our clients, we aim to create alternative lending solutions for a variety of loans including jumbo, super jumbo, non-prime, and others for purchase and refinance transactions.
Want to learn more about how Focus Capital’s alternative lending solutions can help you finance the home of your dreams? Contact us today!
Source:
Business Insider
https://www.businessinsider.com/millennials-taking-over-mortgage-market-homeownership-2019-2
