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PLUS loan – How do they work?

Different types of Federal and private student loans are available in the market in order to help students pursue their higher education. One of the popular types of student loans is the Federal Parent PLUS loans. These cash loans no credit check are available to the parents of the undergraduate students who are pursuing undergraduate courses. The funds from these loans can be used to cover the school and education related expenses of the students. These loans are available at a fixed interest rate of 6.41%. In order to get this loan, the student must be enrolled at least half time in the college and the parents should also pass the credit check.

Facts about Parent PLUS loans

Here are some of the basic facts about Parent PLUS loans. Let’s take a look at them:

  • Parents can take out this low interest loan in order to help pay for the education of their child. Moreover, these loans are federally guaranteed.
  • These loans are a great way to fill out the gap of funds resulting after you take out Stafford loans and other scholarships.
  • These loans will help the parents borrow the total cost of undergraduate education which will include room and board, tuition, other school expenses, etc.

Applying for Parent PLUS loans

These loans are non-need based loans. Thus, in order to get this loan, the students or the parents will not have to show any kind of financial hardship. The lender will only check whether or not the parents have an adverse credit. People with adverse credit will not qualify for this loan. In order to get the personal loans for bad credit, the eligible student will have to fill out the FAFSA Financial Aid Application form. You will get this form from the financial aid office of the school. These loans require no asset as collateral but will require you to pay 3% origination fee and 1% federal default fee. Apart from this, you will be able to receive a 0.25% repayment interest rate credit if you opt for automatic debit from bank account to pay off the loans.  In some cases, the interest payments that you make on the loan will be considered as tax deductible.

Amount that can be borrowed by the parents

You cannot borrow an unlimited amount on the Federal Parent PLUS loans. There are yearly borrowing limits. Here you should note that the yearly limit on PLUS loan should be somewhere equal to the difference between the cost of attendance and the other financial aids received by the student. Let’s take an example. Let’s say that the cost of attendance of a student is $7,000 and he/she receives $3,500 in other financial aid. In that case, the parent will be able to borrow not more than $3,500 as a Parent PLUS loan. The loans funds will be directly sent to the school by the U.S. Department of Education. The funds are mainly sent in two instalments. The funds will be used to pay all your educational expenses and if there is any excess amount left, then the funds will sent to the parents through check.

Hope now you have a clear idea about what PLUS loans are and how it works.

Home equity loan – Get know the basics of this loan option

Of late, the real estate market situation has improved. As a result, most of the properties now have equity in them. If you find that the value of your property has increased to a great extent, then it will be a good option to take out a home equity loan and cash out the equity in the property. This will help you meet your present financial needs easily. Your present loans for people with bad credit lender will be able to help you in getting a home equity loan.

Defining a home equity loan

With the help of a home equity loan, you will be able to get a lump sum amount using the equity in your property as collateral for the loan. This will be similar to that of your principal mortgage to some extent.

The loan amount that you can borrow

When you take out a home equity loan, the lenders will let you borrow up to 75% – 80% of your home value after considering your existing mortgage. You will be able to qualify for the home equity loan even if you have not paid any down payment or made any payments toward the principal amount of the existing loan. If the market value of the property has increased, then you will be able to qualify for a home equity loan.

Home equity loan interest rates

It should be noted here that home equity loans are a type of second mortgage. These loans are known to have a higher interest rate because they have the second priority. If your property goes into foreclosure, it is the first lender who will be paid off with the sale proceeds. Many a times, the second lender does not receive his dues. In such a situation, the home equity loan is quite risky for the payday loans no credit check lenders. So, he charges a higher interest rate compared to that of the primary mortgage. However, you should be rest assured that these loans have a lower interest rate than credit card loans.

Term period of home equity loans

The home equity loans normally have a shorter term period when compared to that of primary mortgages. They are available for a term period of 10-15 years. As the term period is short, you should note that the monthly payment that goes toward this loan will be comparatively higher. However, it is also a fact that you will be paying less interest payments on the loan due to the short term period.

Utility of home equity loan

The funds that you receive from a home equity loan can be utilized for various purposes. It can used to pay for the education of your kids. You will be able to finance a vacation with this loan proceed. You can also buy household items with the funds. You can finance any item of luxury like a plasma screen television with the money that you get from home equity loans. You will also be able to improve your home with the help of such a loan.

Hopefully, now you have a clear idea about home equity loans. So, if you have equity in your property, you can go for this loan option.

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