How Is Your Credit Is Actually Calculated And How To Improve Your Credit Score

Hello! Credit can be a mystery so I wanted to share some insights on how is your Credit is Calculated, and tips on How to Improve your Credit Score. Please look at how different factors can affect your credit score and pro tips on improving it. ➡️ Items that affect your credit score include: Your payment history (35%) - Pay all your bills on time and for the total monthly amount. You can get your student loans into good standing and lower your monthly payments based on your finances. Monthly payments can be as low as $0, and these $0 payments will still count as a whole, one-time payment. ➡️ The amount of money you owe (30%) - Keep your credit card balance under 30% of your total limit, as this can lower your credit score. ➡️ The length of your credit history (15%) - Lenders look at how long you’ve had a credit history by taking the average age of all your accounts - the longer your record, the better your credit score. ➡️ Types of credit you’ve used (10%) - A diverse mix of credit types, including student loans, credit cards, mortgages, etc., will help improve your credit score. ➡️ Your pursuit of new credit (10%) - Limit the hard inquiries you make. Applying for multiple stores or credit cards will negatively impact your credit score as they pull a tricky question for every application. Reach out today for your credit analysis to get you on track to purchasing or click the link above to order your soft pull report.

The Pros and Cons of Mortgage Refinance to Pay Down Student Loans

Hello, It's Mortgage Wizard again. You might be considering refinancing your mortgage to pay off your student loans. While it can sound like a smart move, it's essential to understand the pros and cons of this decision. If you choose to refinance and cash out to pay down your student loans, remember that the money must go directly to the loan servicer when closing. Also, the loans must be under your name. Consider the repayment period. Most student loans are set up to be paid off over 10 or 20 years. But if you include this debt in your mortgage, you could be looking at a 30-year repayment period. That's a significant extension. Also, remember that federal student loans come with some valuable protections. You could qualify for $0 payments or payment forbearances if you run into financial difficulties. There's even the possibility of loan forgiveness or discharge if you become disabled. If you refinance your mortgage to pay off these loans, you'll lose all these benefits. Before making a decision, weigh the pros and cons carefully. For more details, check out the video above. It's essential to make the best choice for your situation.

Huge Mistake People Make IN PSLF Program

Hello, As we navigate the world of loans and mortgages, I want to share some common mistakes people make regarding student loan payoff approaches. This is especially important if you're considering purchasing a home soon. First, it's crucial to understand your loan payoff strategy. Consider whether you want to pay faster or pay off your loans and prefer smaller monthly payments. Once you've made that decision, avoid these common pitfalls: ⚡️Mistake #1: Overpaying When Aiming for Public Service Loan Forgiveness (PSLF) Let's say you work for an employer that qualifies for the PSLF program. You want your loans forgiven but keep paying more than your monthly minimum payment. If you're on track for loan forgiveness, paying more doesn't get you there faster. Instead, you're essentially wasting money that could be forgiven. Rather than overpaying, use your money to build up your savings, invest in retirement, or save for a down payment on a house. Plus, overpaying can put you in a "pay ahead" status, which might invalidate additional charges you make. So, keep an eye on your "qualifying payments" and stick to the minimum. ⚡️Mistake #2: Neglecting Paperwork Another common mistake is when people plan for PSLF but only fill out the income-driven repayment form, forgetting about the PSLF Employment Verification form. They hope that after ten years, they can file the state, and all their payments will be counted for forgiveness. But the US Department of Education needs proof that your 120 payments were made while working for a qualifying employer. If you keep careful records and track your employers, FedLoans will automatically count your costs for forgiveness. So, remember to fill out all the necessary paperwork. ⚡️ Mistake #3: Refinancing Too Soon This mistake often involves people who work for qualifying nonprofits. They refinance their student loans even though they don't plan to leave their government or nonprofit job. Imagine having a $100K student loan from your master's degree in public health and landing an appointment with the local government. Your payment is over $1000 a month. You refinance and reduce the cost by $50 a month. But what if you had chosen an income-driven plan instead? You could have reduced your monthly income to $600 and gotten almost $30K of loan forgiveness with no remaining balance after 120 charges. That extra $400 a month could have gone towards your savings for a house or other financial goals. Remember to consider the potential of the federal program to help you out. These mistakes can be easily avoided with careful planning and proper guidance. As your mortgage lender, I help you navigate these decisions. If you have any questions, feel free to let me know.

Which Should I Do: Income-Driven Plans or Refinance?

Hi, You might be considering buying a home soon and wondering how to handle your student loans. Should you consider an income-driven repayment plan or think about refinancing? Let's break it down in an easy-to-understand way: ⚡️Refinancing: This option can give you a lower interest rate, which sounds great. But be careful. By refinancing, you give up certain protections provided by the federal government. For instance, your family won't be responsible for your loans if something happens to you. But with a refinanced loan, this isn't guaranteed. Also, if the government introduces new loan forgiveness programs in the future, you might miss out if you've refinanced. ⚡️Income-Driven Repayment Plans (IDR) can help lower your monthly payment. They are based on your income and can be temporary or permanent. The downside is you have to file paperwork every year. Also, interest might pile up if your payments are meager, which can increase the total amount you owe over time. Now, let's look at some pros and cons of each: ⚡️Lower Your Monthly Payment: IDR can reduce your payment based on income. Refinancing can also lower your price, but there's no going back once you refinance. ⚡️Pay Your Debt Gradually: IDR lets you spread your payments over a more extended period. If you manage your paperwork correctly, you might qualify for loan forgiveness. If not, you could end up paying more in interest. ⚡️Pay Off Your Loans as soon as possible: Refinancing might be a good choice if you're making a lot of money and want to clear your student loans in less than five years. You could get a lower interest rate and even make extra payments. But remember, your credit score is essential to qualify for refinancing. There are some drawbacks too: ⚡️Refinancing: You lose access to federal protections and might leave your co-signer or family with your debt if something happens to you. Income-Driven Plan: You have to file paperwork every year. If you file late, your interest can increase. You might also owe taxes on any loans that are forgiven. To help you decide which is the best option for you, check out LoanSense tools. They can help you calculate your savings and understand the impact of each choice. Remember, it's always important to consider both the benefits and drawbacks of each option. If you need more clarification, it might be best to hold off on refinancing since you can't reverse that decision.

Extended Repayment: Why Does It Cost More Money?

Hi, I wanted to chat with you about something that needs to be clarified: extended student loan repayment plans. Understanding these plans can be crucial as you research and buy a home. Let's break this down. Extended repayment plans may seem like a good deal initially because they start with lower payments. But there's a catch - you pay more in the long run. There are two main types of these plans: ⚡️Extended Graduated Plans: Your monthly payment increases every two years, and the repayment period extends beyond ten years. ⚡️Graduated Plans: You pay the same monthly amount, but the repayment period is over ten years. These options result in lower payments than the standard 10-year plan, which everyone is automatically put on. But here's the thing: if your interest rate is over 5%, stretching out your loan with these extended plans is like turning your student loan into a long-term mortgage. You'll pay more over time; these plans don't forgive any interest. According to the US Department of Education, nearly 2 million Americans are on these extended plans. If you're struggling to afford your payments, an income-driven plan, such as PAYE, REPAYE, or IBR, may be a better option. You can see which repayment plan is best for you on the recommendations tab with LoanSense. The great thing about income-driven plans is that you can receive government interest subsidies and forgiveness over time. Yes, you'll need to file paperwork every year, but it's worth avoiding the thousands of extra dollars you might end up paying on an extended plan. Remember, it's all about understanding your options and making informed decisions. Don't hesitate to ask if you have any questions.

Your Loans: Should You Pay Faster Or Pay Less?

Hi, It's Mortgage Wizard again. As you're preparing to buy a home and figuring out your financial plans, you might wonder, "Should I pay off my student loans faster, or should I pay less each month?" Good question! Let's dig into this. Conventional wisdom often tells us to pay off loans quickly, but that's only sometimes the best choice for everyone. Are there times when it's better to pay less? Absolutely! Here are a couple of essential factors to think about when deciding if you should pay less or pay more quickly: ⚡️Your employer: If you work for a public services organization like a school, university, nonprofit hospital, city, state, or county government, or any other kind of charitable nonprofit, then you could be eligible for Public Service Loan Forgiveness (PSLF). This means you can pay less based on your employment rather than your income. ⚡️Your income: If you earn less than 1.5 times your total student loan debt each year, you might also be an excellent candidate to pay less. For example, this could be if you earn $30,000 a year and owe $45,000 in student loans or if you earn $200,000 and owe $350,000. Even if you work in the private sector, you can still qualify for an income-driven repayment plan based on your debt-to-income ratio. But remember, private-sector loan forgiveness programs are less generous than public-sector ones. You might be making payments for a more extended period and face a "tax bomb" or taxation on the amount forgiven. If you work in the public sector, your student loan debt can be forgiven after 120 on-time qualifying payments, and it's not taxed. Plus, you don't have to make those payments consecutively. So if you leave the public sector and then return, you can pick up where you left off. ⚡️Some critical things for you to think about: Could you keep track of your qualifying payments? You can do this by looking at your student loan data file, or LoanSense can tell you this on your "My Loans" dashboard. Know when you need to file your annual paperwork. This is called your "IDR Anniversary date." Could you make sure to file ahead of this date each year to avoid an increase in your payment? Understand which paperwork you need to file each year. If you're trying to qualify for PSLF, you must file two annual forms - your employer verification form and your IDR renewal paperwork. Know which plan will save you the most money - REPAYE, PAYE, IBR, or ICR. If you're married, determine how filing your taxes will impact student loan payments. Can you file separately and save more money? Paying faster is the right choice if you're in the private sector, have a stable income, and owe less in student loans than you earn in a year. For instance, paying off your loans quickly is a good strategy0,000 a year, and you owe $80,000 in student loans, primarily if you work in the private sector, you earn $10. ⚡️Some questions for you to consider: Can you make larger monthly payments to pay off your loans faster? If you want to pay your loan off quicker, have a stable job, and are close to cutting your payoff timeline to 5 years, have you considered refinancing your loan? Remember, understanding your options is the key to making the best financial decisions. If you have any other questions, feel free to let me know.

Why Does Interest Keep Growing On Your Student Loans?

Hi, Are you wondering why the interest on your student loans seems to keep growing even though you're making payments? It can be confusing, but don't worry; I'm here to help you understand how interest is calculated on student loans and what happens when it capitalises. This is especially important if you're planning to buy a home soon. By the way, I've also explained this in the video above, so feel free to check that out too! ⬆️ ⚡️Let's break it down: Income-Driven Repayment Plans (IDR): When you sign up for an IDR plan, your monthly payments are adjusted to be more affordable based on your income. However, there's a catch. Sometimes, the new monthly payment might be so low that it only covers some of the interest that's adding up each month. ⚡️Different IDR Plans: PAYE, REPAYE, and IBR are other IDR plans. They all have rules for handling interest building up, but they all provide some form of interest subsidy. This means the government might help you pay some of the claims. ⚡️Interest Capitalization: This is a fancy term for what happens when the interest that has added up gets added to your total loan balance. This can happen if you fail to re-certify for your IDR plan. When this happens, your loan balance increases and future interest is calculated on this new, higher balance. That's why it's essential to re-certify your IDR plan on time! Understanding how interest works on your student loans can help you make better decisions and pay off your loans faster. If you have any questions, feel free to let me know. I'm here to help you make sense of it all!