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The cost of university education continues to outpace the consumer inflation rate, putting an even greater burden upon the shoulders of financially squeezed families. With annual education costs exceeding $30,000 or more at some universities, the financial burden is particularly profound even when some sort of assistance is made available. Online education costs are on the rise as well.

Government student loans have long been an important way to help students complete their education with private student loans now gaining in importance too. Let’s take a look at the advantages and disadvantages of funding higher education through private student loans.

When it comes to college financing, often the sticker price is one thing, but the actual cost of education is something different. Depending on the aid offered, students can expect to receive anywhere from a full scholarship to not being offered any financial assistance. In most cases, the cost of education lies somewhere in the middle once family income, assets, and other factors have been taken into account.

The amount remaining after financial aid has been factored in is what must be paid to the school, an amount that can vary each academic year. This gap is what often prompts families to consider financing options, with government-backed student loans being one option and private student loans another one.

Private student loans have several advantages to them including:

* Quick approval process: (more…)

The Federal Reserve’s recent bid to boost the economy by cutting interest rates has apparently backfired when it comes to mortgages. Mortgage rates are rising instead of falling, with Bankrate.com reporting average 30-year rates added 0.1 percentage points yesterday to hit 6.08 percent.

“The question is: ‘Did the Fed cut too far?’ ” Bankrate.com’s Greg McBride said.

The Fed last week sliced a sharp 0.5 percentage points off of the key federal-funds rate, which banks charge each other for overnight loans.

But while cutting the federal-funds rate directly impacts short-term borrowing like credit-card debt, it doesn’t automatically affect long-term loans like mortgages.

Instead, banks generally base mortgage rates on 10-year U.S. Treasury bond yields, which have risen 0.23 percentage points in recent days.

McBride said Treasury yields have gone up because some bond investors fear the Fed cut short-term rates too much, risking inflation. (more…)

1. Not knowing which mortgage fees the borrower can and cannot negotiate. Most items in a real estate transaction are negotiable. Learn about every item on the HUD-1 Settlement Statement before ever applying for a mortgage.

2. Choosing and trusting the first loan officer the borrower interviews. Shop around. Get referrals from family, friends, co-workers and others you trust who’ve recently completed a satisfactory mortgage transaction.

3. Using an interest-only or “payment option” adjustable-rate loan primarily to qualify for a more expensive house. In today’s market of slower appreciation and falling prices, such a loan could leave you with a mortgage balance higher than the value of the home. (more…)

I bumped into a loan officer today, worried that the mortgage industry was in such shambles that even wealthy home-purchasers would never be able to get loans in today’s market. His rationale was that since standards have tightened and most home-buyers are required to have at least a 5% down payment, no houses will be sold.

I tried to console this young chap but to no avail. I told him that 30 years ago people couldn’t even think of owning their home without at least 20% down. He retorted, “Back then houses were a lot cheaper so 20% down was nothing, but thanks for your positivity,” rather sarcastically. (more…)

For any homeowner, the decisions you make concerning your real estate, are equivalent to those you would make with any investment. The hope, of course, after paying back your mortgage in its entirety, is to achieve as much value in your home as possible.

Far more value than when you bought it. Many, achieve this through further investments, such as adding to your home. However, these improvements are costly, and can often necessitate additional loans. To attain these funds many investors choose to the option of cash-out refinancing.

With cash-out refinancing, the borrower refinances their mortgage for more than they owe, and then keep the difference. For example, lets say you still owe $50,000 on a $150,000 house. If you presently need $25,000 to remodel your kitchen, you can then refinance the mortgage for $75,000. At this point, you get a better rate on the $50,000 you owe. Through this process, you take advantage of the equity in your home, often lower your monthly payments, and receive additional cash. (more…)

PMI, or Private Mortgage Insurance is basically an insurance policy for the lender against the default of your mortgage. Many mortgage lenders require PM in order to give a loan that requires more than 80% funding of the home appraisal. (Example: If you are purchasing a home that appraised at $100,000, PM would be required if you were to borrow more than 80% of the value of the home, or $80,000.)

Previously, lenders would allow borrowers to avoid PMI by giving an “80/20″ or “80/15″ loan. 80% of the loan would be funded by a first mortgage, while the additional 20% would come from a home equity line of credit. This 20% home equity line would mask as a down payment. Often called in the business a piggy back loan. With today’s mortgage market in the state that it is in PMI will be much more prevalent in upcoming months than ever before. 80/20’s have been done away with and lenders are tightening up their guidelines. (more…)

“While just about everyone knows about the pre-approval process for home mortgage loans, fewer know that pre-approval can also be used when purchasing an automobile. The process works in much the same way, with the lender reviewing the borrower’s credit history and credit score, and coming up with an amount that can be borrowed, and the associated monthly payment.

Knowing how much you can afford to pay for a car certainly makes the process of car shopping a lot easier. While it might be nice to shop for a Ferrari, if all you can afford is a Volkswagen you would be well advised to focus your shopping in that direction.

Being certain about your financing options will also aid in the negotiating process for the car. Those car dealers who know that you are truly able to afford the car you are looking at will often be more willing to work with you, and they may be more willing to lower the price in order to make the sale. (more…)

Bad credit is like a bad habit. The habit doesn’t even exist at first and then it slowly snowballs. Credit scores start off high and gradually lower as consumers lose hope that credit repair is even possible. A small blemish often leads to bigger problems. Sometimes small credit issues can feel overwhelming and avoidance often occurs. If taken control of and stopped in its tracks, credit ruin can be avoided.

Here are some of the most helpful tips I can give on maintaining good credit, as well as repairing your credit yourself.

1. A great way to improve your credit score easily is to pay your bills on time consistently. Payment history is one of the key factors used to establish the credit score. One late payment can greatly affect it. Many people do not know however, that a late payment will most usually only show up on your credit report if it is more than 30 days late. Not just late in general. Additionally, payments that are more than 30 days late, 60 days late, 90 days late, etc. are huge hits on the score too. Payments must be made on time for good credit history to be established.

2. If you cannot pay some of your bills, or your interest rates on your credit cards are too high and you cannot afford the monthly payments, ask for a lower interest rate. Yes, the creditor may say no, but you are no worse off than you started. A lower rate can save you money every month and allow you to get out of debt sooner. Often times creditors will lower your interest rate if you are in good standing with them, or they may put you on a performance plan that if adhered to you are rewarded with the decrease in rate.

3. This step is not as easy to implement because it requires having the ability to pay down some debts. It is recommended to keep balances on any credit line from 10-30% of the limit. For example if you have a credit card with a $5,000 limit you should never owe more than about $1,500 on it. (more…)