What Should You Know About Student Loan Deferments?

Student loans are often the first type of debt that many people take on. They are also next to impossible to eliminate during a bankruptcy, so they have the potential to follow a person for the rest of their lives if they’re not able to pay them off quickly. Unfortunately, it can be difficult to make payments when your income doesn’t provide enough money. Because this is actually a common situation for many new graduates, the option to defer payments is becoming more popular.
As the U.S. Department of Education explains, a student deferment loan is a period during which the repayment of the principal and interest rate of your loan is temporarily delayed.
The above sentence just goes to determining the authority of deferred student loans as a form of student aid.
Financial Tips For New College Students

Definition of student loan deferments:

Deferring student loan payments means delaying payments for a period of time. This can allow a person to pursue higher education or give them the extra time they need in their job search. There are several disadvantages to deferring student loan payments, however.

Period of delayed repayment

There is a limited amount of time that you can defer your loans for. Most federal student loans allow a person to defer their payments for six months to one year. Sometimes this can be extended if a person is continuing their education, depending on the type of loan that you have. At the end of this time, payments must resume.

Claims for deferred student loans

You have to have a good reason to defer. Specifically, you have to be able to prove that you have circumstances that are preventing you from making payments. Being in school at least part-time, being unemployed or having a physical disability can qualify a person for a deferment. You should be aware, however, that you cannot claim financial hardship without giving a reason. This means that you cannot get approved for a deferral in order to get time off from your loan payments to pay off other debt.

One-time deferment of loan

You can only defer payments once. Deferments are only allowed once per loan. This means that once you choose to defer your payments, you will never get another chance to do so again. Because of this, it is important to make sure that you really need to defer your payments before applying for a deferment. If you can make your payments by cutting back on other expenses, then it is usually a good idea to do this rather than getting a deferral. Wait until you can no longer make your loan payments before applying for a deferral.

Accumulation of interest

Interest still accumulates while the loans are in deferment. This is one of the most overlooked facts about deferment. Even though you are not making payments, interest is still accumulating on the balance that you owe. This means that when you go back to making payments on your loan, your loan balance will be higher than when you started deferment. Depending on the type of loan you have, this could mean that your payments will be higher when you come out of deferment or that you will pay off your loans over a longer period of time. In order to avoid this, some people choose to make interest payments while they are in deferment. This prevents interest from accruing on the loan balance.
Loans can be deferred in a number of situations, such as-

  • Enrollment of at least half-time in school
  • If you have been unemployed for maximum three years
  • During periods of economic problems
  • If you serve in the Peace Corps
  • During active military duty and also for the first 13 months after concluding your military activities and duties
  • In the first six to nine months from the commencement of your graduation

Alternatives to student loan deferments:

If you do not wish to get involved or come any closer to something like student loan deferments, then there are alternate ways by which you can reduce your student loan burden.
You can get in touch with your lender and work out a repayment plan that suits you the best. Lenders are keener on seeing at least some of their money return than to see no returns at all. Talk to your lender and find out if they would be willing to reduce your payments or get you enrolled in a fixed income-based repayment plan.
For student aid, the federal government plays a major part in offering a variety of income-based repayment plans, where you can make payments depending on your earnings and wages.
If you are currently employed, your employer may also be able to assist you in repaying your loans and helping you out with your student loans.

Final thoughts

There are both good and bad sides to deferring student loans. While the best part about student loan deferment is that it gives borrowers a break from repayments, especially when they are facing a financial crisis, loan deferment, on the other hand, may also lead to burdening borrowers in the future. The key is to talk to your service provider or lender and explore the possible student loan and repayment plans that work out the best for both of you.

The Best Way to Sell a House Flip

No doubt, one of the most exciting parts of house flipping is selling. It’s the culmination of months of work and many house flipping steps – some which went as planned and some that didn’t. Either way all your work is finally going to pay off for you…provide you get the right price.

You most likely financed the deal by getting money from other people, be it investors or private equity. Or maybe you were lucky enough to get a loan from a bank. You bought the house and did the rehab and the home is ready for a buyer to plunk down some cash and make it theirs.

When you were first starting out in assessing the house flip, you determined the after repair value (or ARV) that the house could sell for when it’s all done. And now with the house done, you are ready to list it with a real estate broker. It’s a super exciting time in your life for sure. All those many months of hard work are finally coming to fruition and you are looking forward to leveraging your success to maybe quit your job, start your own business or go along to your next house flip.

I have long advocated ARV as a standard number to set your sights on when house flipping. ARV is an especially important number for you to know as it’s the basis for all your work and costs associated with the house flip.

If you stop and think, the price you sell for is the most important number to crunch when you flip. That number sets the tone for the entire project. If you buy a house for $160,000 or $170, 000, did minimal rehab but you can’t sell it for even $180,000 or $190,000, chances are slim you’ll make money flipping houses.

If you buy the hose for $100,000, put $50,000 in rehab into it and cannot even sell it for $160-170,000, then you will not be flipping houses for too long.

That’s why the ARV you determine at the start of the project is solid a benchmark for your profitability. But at this point after all the rehab has been done, the real number as to what the actual “after repair value” is found out right now. This is the number of what you can sell the house for today.

So let’s say in the above scenario, you bought the house for $100,000, you put $50,000 in rehab costs into it and your real estate broker tells you that the house can sell for $200,000. If she’s right, you’ll most likely make a nice profit, minus finance costs and broker fees.

To arrive at the $200,000, Chances are that your real estate broker got the pricing from using comparative houses or “comps” which have sold in your area. At six months after the start of the house flipping project, the house is looking great and you’re feeling confident that you can get your price. All you need now is a buyer.

So because the broker tells you the price should be $200,000, do you go out and list the house for $200,000? Not a chance.

Especially when you’re first learning how to flip a house, and even if you’ve flipped dozens of houses, always seek the counsel of your team. When you sell, ask the advice of your house flipping team, especially the real estate broker on your team.

Ideally, the real estate broker may be the same broker that you worked with early on when finding your first house to flip. If you agreed ahead of time to sell the house with the same broker you bought from, you need to keep your word.

Make sure you keep your word. House flipping success hinges on forging relationships with people who know, like and trust you. It proves to the real estate broker that you are a credible and honest person, which will come back to you in the end. So if you did make this agreement at the beginning of the process, keep your word.

Be honest and keep your reputation intact. If you start crossing people, they will remember and will not want to do business with you.

When your real estate agent does the competitive analysis, listen to what it tells you. Like most house flippers, you’ve been keeping an eye on the market so you probably have a good idea as to what the new price might be…but the truth is in the numbers.

When you do get the number from your broker, it could either come in above the ARV or below it. If it’s the latter, that’s when the 70% Rule will save you.

So when you do sell your house flip, make sure you put safeguards in place to make sure you lock in your profits. You do this by buying at 70% or more below what your ARV will be and the 70% includes your repair costs as well. When you do this right, your house flipping profits will be safeguarded from loss. Using these tips will help you to sell and profit when flipping houses.

What to Expect from Debt Consolidation

Debt has fallen on you like an avalanche. You don’t know where to start digging, and all you can think about is how much more debt you  have  in your way. You never thought you’d be in this mess, but here you are – buried. The good news is that there is a way out of the pile of bills with debt consolidation.
Debt consolidation has become a popular option for those looking to eliminate their debt problems as quickly and effortlessly as possible. With the number of companies sitting there to overlook your debts and offer counseling on paying them off, debt consolidation can be a tad tricky to understand at times. So while you’re looking at the stack of bills piling on your desk, are you wondering about how debt consolidation actually works?
Knowing what to expect when you choose debt consolidation will help you finally put an end to your financial madness.

What to Expect from Debt Consolidation

Making an Appointment

The first thing you should do is research the different debt consolidation companies available. One of the easiest ways to check the credibility of a company is by keeping your eyes out for their BBB or Better Business Bureau reviews. If the company has secured an A+ rating on BBB, then you can trust the company with your eyes closed.
Just like any other business, each debt consolidation company has its own fees for the work they will do to help you. While you may not want to go with the most inexpensive company,  getting a good rate is important in starting your road to financial freedom.

  • Start with finding a company of a good and strong reputation. Seek recommendations, read reviews, and research. For example, the National Foundation for Credit Counseling (NFCC) offers certification for counselors and sets certain requirement for member organization. Thus, seeking references from the NFCC will be a good way to start.

Once you find a suitable company, call them to  schedule an appointment. Be sure to ask  about the type of documents you’ll need to bring.

The First Appointment

Duringthe first appointment, your debt consolidation counselor will look at your income, expenses, and debt. He or she will then calculate all of your debts, and then determine the affordability of the amount that you will have to pay per month.t.
 To determine that exact figure, your counselor can look into finding a debt consolidation loan, and start calling creditors to discuss settlements.

Before Your Second Appointment

Between your first and second appointment, your counselor will be hard at work calling your creditors to negotiate a settlement. Many lenders will decrease the amount of money you owe them if you close your account and agree to pay the lower amount. This is where having a good counselor will benefit you. One that is experienced in negotiations and well known in the circuit of creditors will have a better chance  of getting your debt decreased significantly. Some people can see a decrease in debt up to 20%.
While you are at the stage where you are about to schedule a second appointment, to help you live a life that is completely debt-free, a certified credit counselor will calculate your total debts. All secured and unsecured loans are taken into account, which can help create an all-inclusive budget for you.
Once the final amount is settled or all debts, your counselor will go to work on finding you a loan that has the lowest interest rate. With a low-interest rate,  there are higher chances of you being able to afford the monthly payment.

Your Second Appointment and Beyond

At your second appointment, you’ll find out how much debt you’re responsible for, and the loan that your counselor has found for you. If you agree, you’ll fill out the necessary paperwork.
The next step is to determine how you will make the monthly payments on your debt consolidation loan. Your counselor will help you come up with a budget. You’ll use this budget to the best of your ability, and schedule subsequent appointments w to make necessary adjustments, if any. .

Paying fees

Certified professionals will charge you a certain amount of fee. You don’t want to settle with something that’s too inexpensive for you to digest, or go for a company that plans on burning a hole in your pocket. Make a comparison especially when it comes to getting a bang for your buck. You will find non-profit organizations as well, but you will still be expected to pay a minimal fee and some nominal charges to get your consolidation work started.

Final words

Once you manage to grab a hold  on your budget and payments, you will be free to deal with your personal fianances on your own. If you ever need assistance, your debt consolidation counselor is only a phone call away.