Student Loan Debt Consolidation

A student has the option to combine several federal loans into a single loan. This is called as consolidation of the loans. Consolidated loans have lower interest rates and higher repayment periods.

There are several finance organizations and banks that come forward to consolidate existing loans. The particular company which consolidates the loans first pays off the existing loans to their respective lenders. Then all those loans are merged into one, taking the average of their rates of interest as the applicable rate of interest on the consolidated loan. Thus the borrower finds a reduction in the interest rate. It is then this company alone to which the borrower must repay the loan.

The consolidation process is a fairly easy process. There are several companies (mostly online) who are only too willing to examine the existing loans of the student and consolidate the loan with them. Students can approach these companies via the internet. An ordinary consolidation procedure takes about 30-45 days. There are no prepayment penalties on consolidated loans.

The rates of interest on educational loans increase on the 1st of July each year. But when a loan is consolidated, then the rate of interest in the year of consolidation becomes constant for the remaining period of the loan. This is called as locking the rate of interest of the loan. Locking a loan by consolidating it is a suitable option if the borrower wishes to be precluded from the rising rates of interest each year. Certain finance lenders online provide locking of consolidated loans for as low rates as 3.5%.

Consolidation of loans is a prudent option as the borrower has to think about repayment of a single loan instead of several. When several loans are consolidated into one, the interest payable also reduces drastically. By consolidation, the borrower can save hundreds of dollars per annum in the amount that would have been paid as interest. Another advantage is that in the situation of deferment in repayment the borrower has to negotiate with only one lender.

Home Equity Loan Fees

Here is a brief list of possible fees that may apply to your home equity loan: Appraisal fees, originator fees, title fees, stamp duties, arrangement fees, closing fees, early pay-off and other costs are often included in loans. Surveyor and conveyor or valuation fees may also apply to loans, some may be waived. The survey or conveyor and valuation costs can often be reduced, provided you find your own licensed surveyor to inspect the property considered for purchase. The title charges in secondary mortgages or equity loans are often fees for renewing the title information. Most loans will have fees of some sort, so make sure you read and ask several questions about the fees that are charged.

Home Equity Loan

A home equity loan (sometimes abbreviated HEL) is a type of loan in which the borrower uses the equity in their home as collateral. These loans are sometimes useful to help finance major home repairs, medical bills or college education. A home equity loan creates a lien against the borrower's house, and reduces actual home equity.
Home equity loans are most commonly second position liens (second trust deed), although they can be held in first or, less commonly, third position. Most home equity loans require good to excellent credit history, and reasonable loan-to-value and combined loan-to-value ratios. Home equity loans come in two types, closed end and open end.
Both are usually referred to as second mortgages, because they are secured against the value of the property, just like a traditional mortgage. Home equity loans and lines of credit are usually, but not always, for a shorter term than first mortgages. In the United States, it is sometimes possible to deduct home equity loan interest on one's personal income taxes.
There is a specific difference between a home equity loan and a Home Equity Line of Credit (HELOC). A HELOC is a line of revolving credit with an adjustable interest rate whereas a home equity loan is a one time lump-sum loan, often with a fixed interest rate.