Monthly Archives: October 2014

Can Short term lenders Offer loans to active military personnel

Short Term Loans and Active Duty Soldiers: What is Legal?

Federal law, through the Military Lending Act, makes it illegal to offer short term loans, also known as payday loans or cash advances, to any active duty member of the military. In addition, their spouses are also ineligible to receive these loans, even if they are earning their own income. Any reserve members who have been more than 30 days without being called to active duty are eligible for a short term loan.

If a loan of this type has been obtained prior to being put on active duty, or if the loan is in default, the loan can be deferred with no interest accrual or action taken against the military member or their family, until after the active member has returned from deployment. There are services available for financial assistance through government loan programs, to enable the military member to repay these prior loans.

Despite the law, which was enacted in 2007, many lenders still offer these types of loans to military members, even those who are on active duty. While these loans are very similar to traditional short-term loans, they do typically offer slightly different details and requirements that make them technically legal.

Companies that advertise short term loans for active-duty members generally offer longer repayment terms. Instead of requiring payment within a week or two, they will instead extend the term to a year or more. The result is often much higher interest cost with significant savings if the loan is paid sooner.

The military does offer financing of their own, often with reduced interest rates. Many soldiers refuse to accept these types of loans because they prefer their superiors are not aware of their debt or possibly damaged credit. Especially since bad credit can result in losing some forms of security clearance.

Payday loans can attained quickly and nearly anonymously, often without a credit check. This makes it easy for the soldier to obtain the money they need without a lot of questions. Unfortunately, many of these loans can cost the borrower to pay interest rates as high as 400 percent or more.

Despite the lenders basically following the restrictions established by the Military Protection Act, the government is currently looking for ways to crack down on these types of lenders. New legislation is being considered to help reword the law to reduce the amount of these loans that are obtained. The military is also currently actively engaged in educating new recruits about payday, or short term loans, and making military members aware of their options.


Looking For Financial Stress Relief Start With Restructuring Your Debts

Restructuring Your Debts Will Create Financial Stress Relief, 3 Important Tips

Debt can be a significant source of stress for any consumer. When it gets harder and harder to pay your bills every month, it can sometimes feel like the walls are closing in. One of the problems with debt stress is that solutions such as bankruptcy can only add to the stress and make the situation worse.

For people who are experiencing debt issues and the stress that goes along with them, you will want to look into restructuring your debt. This is a process where you use new financial products to help lower debt costs and get your debt under control. Before you jump into a debt restructuring program, there are a few things to keep in mind.

Always Look At The Whole Arrangement And Not Just The Monthly Payments

Debt restructuring deals can be very comprehensive and include several important parts. But the part that most consumers focus on is the monthly payments. If a consumer can afford the payments, then they will often give the thumbs-up to the restructuring plan.

If you spend time reviewing a prospective restructuring plan, you can usually find fees and charges that can be negotiated to your favor. Before agreeing to a restructuring agreement, always review the entire agreement and not just the monthly payments.

Look Around For The Best Arrangement

The relief consumers feel when they find a debt restructuring professional who will help them can be significant. But it is important to remember that there are many debt restructuring professionals who can help you get your debt under control, and they all have different ways of doing business.

For your education and benefit, you should always look around and compare the offers you get from a variety of debt restructuring professionals. By comparing a variety of offers, you can find one that offers the greatest amount of relief for the lowest possible costs.

Know Your Options

Before you head out to shop around for debt restructuring deals, you need to do some homework and understand the terms and products you will be discussing. You will hear about secured loans and variable rate arrangements a great deal, but that does you no good if you do not know what those products are.

A secured loan is one that requires collateral and a variable rate is one that can change monthly, quarterly or annually, where as an unsecured loan, does not require using a car, home or other collateral, but may have higher interest rates and you will certainly have fewer options, depending on your credit profile. Variable rates can get expensive, while collateral can often be hard to come by. Learn about your options and be prepared to have good conversations with debt restructuring experts about your finances.

Debt restructuring is a great way to reduce the stress in your financial life. It is important to be prepared to discuss your options with a financial professional and understand what you can do to help avoid long-term financial issues.

Avoiding The Hidden Costs Of Your Mortgage Refinance With These Tips

Today more than ever before Americans are refinancing their homes, taking advantage of lower interest rates. The last 4 years have seen interest rates for mortgages below 5%. Late 2012 saw an all tine low of 3.31%. When you refinance your property, it is common to pay anywhere from 3.5% to 6% of your remaining principle in refinance fees, which are not one single fee but rather many smaller fees, which add up quickly. The refinance fees you face will vary by state and by lender. When you refinance you need to beware of hidden fees, and understand which fees you can avoid, although most of these fees cannot be avoided sadly. There are some costs as well which aren’t fees and are optional that can be to your benefit. We will discuss the various costs, fees and charges involved with refinancing your mortgage.

Application fee.

You can be denied a refinance and still have to pay this fee. It covers the credit check and some clerical work. This can cost from $75.00 to $300.00

Discount points:
This is a fee which is equal to 1% of the loan. Your mortgage or refinance might be 6% interest and a charge of 1 point making the interest 7% in this example on a 100,000.00 home the 1 point would be $1000.00, which if you paid the $1000.00 it would knock the interest back down on the loan to 6%. A lender may charge anywhere from 1 to 4 points on average. The more points you pay off when taking out the loan or refinance, the lower your interest will be. These points and cost of them are tax deductible. Points as prepaid interest reduce the interest rate, but raise the closing costs. If you are doing a quick property flip not buying the points is best, but if you plan to stay in the home for many years then lowering the interest via points will help reduce your long term costs.

A lender might offer you a 20-year fixed mortgage of $170000.00 at 6 percent interest with no points. The monthly mortgage principal and interest payment would be $1,426.27. If you pay 2 points at closing for a cost of $3400.00, you can bring the interest rate down to 5.5 percent, with a monthly payment of $1,377.74 . The savings difference would be $48.53 per month. But it would take 70 months or close to 6 years to earn back the $3,400.00 spent to lower your monthly payments. If you plan to own the house for the entire 20 year duration of the loan, paying the two points would save a little over $8153.00 dollars on your mortgage, just by paying two points at closing to reduce your monthly payments in the long term.

Paying your loan off early penalty:
Some mortgages will assess a fee should you pay it off early. If this is so, it will be listed in your mortgage contract. The penalty can be upwards of 6 months of interest. Any Federally issued or insured loan will be exempt from this fee, such as FHA and VA loans. Some states bar this penalty, but you should be aware of the possibility. If the refinancing is with the same lender, ask your lender if the prepayment penalty can be waived, sometimes a refinance done with the same lender can get this penalty waived. Any prepayment penalty can add to the time it takes to break even from the refinance, so you need to compare this penalty to what you are gaining.

Title insurance:
You will have to pay this insurance to get your refinance. Court records are searched to see if you have actual ownership of the property, and to check for any liens that may be present on the property. This insurance will protect the lender by covering them for any errors made during the court records search and lien search. This can cost you anywhere from $500.00 to $800.00 on the high end.

Property Survey:
You might be required by the refinance lender to survey the property, as well as any improvements that have been made since you bought the property. This can cost from $200.00 to $500.00

Appraisal fee:

This fee is hard to avoid, unless you have not owned the property long and have had one done not to long ago. If you have owned the property for a long time, and your property has gone up in value the appraisal can work in your favor. Cost ranged from $250.00 to $500.00. It should be noted however that some lenders and brokers will include this fee as part of the application fee.

Loan origination fee
This fee refers to the initiation and completion of the home loan or refinance process. This fee can cover the work of credit checks, income verification, asset checks, and employment information, and paperwork, clerical work and the like. This fee goes to the paid to the loan officer or broker who completes your loan. It is pretty much the originator’s commission. It is often 1% of the loan principal, but can be as high as 1.5% of the principal.

Inspection fee

May be required by the lender to check your structural stability, check for water and mold damage, termites, the plumbing, the wiring, septic system and your water system. This can cost from $100.00 to $450.00

Attorney review/closing fee

If lawyers are needed by the lender for any reason you will pay. This is often the case at the closing and can cost your from $500.00 to $1,500.00

The editorial team from Installment Loans Network works hard to uncover articles to help consumers navigate personal finance and achieve financial independence, we always welcome your suggestions and topics for future articles.