Category: Loans/Bonds

Should You Pay Off Your Mortgage Early – J.D. Roth

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My friend Amy recently wrote with an interesting dilemma. “Should I pay off my mortgage early?” she wonders. Amy has a high-paying job and has managed to save enough that she could be completely debt-free if she wanted to. And she kind of wants to! But is this the best choice? She’s aware that this is a nice problem to have — but it’s still a bit of a muddle. She’d like some guidance. Just so everyone is on the same page, here’s a quick look at the pros and cons to paying off your mortgage. There are advantages and disadvantages to both choices. Are certain advantages more important than others? You make the call……….

Read more: https://www.getrichslowly.org/pay-off-mortgage/

 

 

 

 

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Avoid These 10 Public Service Loan Forgiveness Mistakes – Zack Friedman

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It’s no secret that student loan forgiveness is a hot topic. When it comes to Public Service Loan Forgiveness, in particular, the requirements can be tricky.

That’s why it’s critical to ensure you know the details and are not headed down the wrong path.

Here are the 10 most common public service loan forgiveness mistakes to avoid at all costs.

1. Thinking Public Service Loan Forgiveness is automatic

Nope. Thinking that you work in “public service” and are performing a “public service” job won’t cut it.

The Public Service Loan Forgiveness Program is a federal program that forgives federal student loans for borrowers who are employed full-time (more than 30 hours per week) in an eligible federal, state or local public service job or 501(c)(3) non-profit job who make 120 eligible on-time payments.

Those “eligibility” requirements bring us to our second common mistake.

2. Not completing the Employment Certification Form

 The number one thing you can do to ensure you’re on track for public service loan forgiveness is to complete the Employment Certification Form.

The next question is: how often should I submit the employment certification form for public service loan forgiveness?

You should submit this form:

  • when you begin a job in public service
  • when you switch employers
  • annually

It’s important to submit this form annually to keep the U.S. Department of Education aware of your employment to ensure you’re on the right track.

3. Submitting an Employment Certification Form with errors

This sounds like a no-brainer, but your employment certification form could be rejected if there are errors.

Here are a few common mistakes:

  • information on one form that does not match previous forms
  • missing information such as an employer address
  • not completing all the required fields
  • correcting errors on the form, and then failing to place your initials next to the corrected errors

This all may sound bureaucratic, but better safe than sorry.

4. Not having your employment certification form signed by your employer

Your employment certification form must be signed by an authorized official at your employer.

Make sure it is that person who signs the form, not the person who sits next to you at work.

5. Not enrolling in an income-driven federal student loan repayment plan

To be eligible for public service loan forgiveness, you must be enrolled in an income-driven federal student loan repayment plan.

Remember, only federal student loans (not private student loans) are eligible for public service loan forgiveness). You also must make a majority of the 120 required payments while enrolled in a federal student loan repayment plan.

While the 10 Year Standard Repayment Plan qualifies for public service loan forgiveness, your federal student loans would be paid off after 10 years so there would be no more student loans to forgive.

How do you know which income-driven student loan repayment plan is best for you? Well, it depends on your specific financial situation.

This public service loan forgiveness calculator shows you which income-driven student loan repayment plan will maximize your student loan forgiveness.

6. Forgetting to consolidate your student loans, if necessary

Remember, only Direct student loans qualify for public service loan forgiveness.

So, if you have Perkins Loans, FFEL Loans or you borrowed student loans before 2011, you may need to consolidate these federal student loans into a Direct Consolidation Loan.

How do you know if you have Direct student loans?

You can check at Federal Student Aid. If you don’t see the word “Direct” next to your student loans, then you may need to consolidate those student loans.

How do you consolidate those student loans?

If you decide to consolidate those student loans, you can do so through StudentLoans.gov.

7. Not taking advantage of Temporary Expanded Public Service Loan Forgiveness

Were you denied public service loan forgiveness because you were enrolled in the wrong student loan repayment plan?

Congress has set aside an extra $350 million of public service loan forgiveness for this exact situation.

8. Failing to re-certify your income each year

As the name suggests, your income-driven student loan repayment plan is based on your income.

As your income may change each year, the federal government wants to ensure that you are still eligible for that income-driven student loan repayment plan.

Therefore, make sure to re-certify your income each year at studentloans.gov. At the same time, you can submit your annual Employer Certification Form.

9. Skipping student loan payments

While your 120 student loan payments under public service loan forgiveness do not have to be consecutive, you need to submit each payment within 15 days of the due date for that payment to count.

10. Thinking your job is what qualifies you for public service loan forgiveness, when it’s your employer that matters

Remember, it’s your employer that matters, not your role.

If you work with a non-profit, but are employed by a private company, this would not qualify for public service loan forgiveness.

Now that you’re in the know, hopefully the path toward public service loan forgiveness will be smoother.

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5 Secrets To Refinance Your Student Loans – Zack Friedman

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With interest rates rising, there’s no better time to refinance student loans.

Student loan refinancing enables to you combine your existing federal and private student loans into a new, single student loan with a lower interest rate. As a result, you can lower your monthly payment and save significantly on interest costs, which can help you pay off your student loans faster.

(You can see how much you can save through refinancing with this free student loan refinancing calculator).

Here are 5 secrets to get approved to refinance your student loans:

1. Have a strong credit score

Lenders want to refinance student loans for borrowers with a history of financial responsibility.

One way they measure financial responsibility is through your credit score (or its underlying components). To increase your credit score, make sure that you meet your financial obligations and have a history of on-time payments. Don’t skip any payments and minimize your total debt as well as your credit card utilization.

If you don’t have a strong credit score, the good news is you can apply with a qualified co-signer, which can increase your chances for approval.

Insider Tip: Aim for a credit score of 700 or higher. However, lenders will refinance student loans for borrowers with credit scores starting at about 680.

2. Have a strong income

In addition to a strong credit score, student loan lenders want to ensure that you have stable and recurring income to repay your student loans.

How do you know if you have enough income to get approved?

Review your monthly after-tax income. When you subtract your monthly student loan and other debt payments, does a sufficient amount of income remain for other essential living expenses?

Insider Tip: If you do not have sufficient income after making student loan payments, you can increase your chances for approval with a qualified co-signer who has a strong monthly income.

3. Have no or limited other debt

Student loan lenders will evaluate all your debt – not just your student loan debt.

If you have credit card debt, mortgage debt or auto debt, lenders will sum all your debt payments together to understand your total debt obligations each month. The lower your monthly debt payments relative to your income, the better.

Insider Tip: This free lump-sum extra payment calculator can show you how much money can save by paying off some of your debt with a one-time payment. Pay off some of your debt obligations before applying to refinance student loans.

4. Have a relatively small debt-to-income ratio

Student loan lenders are interested in the relationship between your monthly income and your monthly debt obligations, which is known as your debt-to-income ratio.

For example, if you have $10,000 of monthly income and $3,000 of monthly debt expenses, then your debt-to-income ratio is 30%.

Insider Tip: The lower your debt-to-income ratio, the better. You can improve your debt-to-income ratio by increasing income or decreasing debt (or both).

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5. Be employed

It’s best to be employed with 1-2 years of work experience to maximize your chances of being approved for student loan refinance.

However, if you have a written job offer when you apply to refinance student loans (even if you are in graduate school or residency, for example), you can still get approved for student loan refinancing.

If you are unemployed or do not have stable, recurring income, it will be difficult to be approved for student loan refinancing.

Insider Tip: If you are unemployed or underemployed, your best option is to apply with a qualified co-signer with a strong credit profile.

Here’s a bonus tip: Apply to refinance your student loans with multiple lenders at once, not just one. First, it will only count as a single credit inquiry, and second, you will also maximize your changes for approval.

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