June 7th, 2014
Speaking from a recent graduate’s point of view, getting approved for a loan at my age, on your own is a tough venture. Many companies offer lower interest rates and better loan terms with a co-signer. Co-signing is when a parent, or individual, agrees to guarantee a debt on the student’s behalf. This meaning that they will be responsible for making the loan payments if the student does not. Often times, this is the obvious answer. However, financial planners have cautioned millennials and their parents to think about the implications of co-signing first. Som Hanvanich, a financial planner in Kettering, Ohio, states, “Adult children should ask their parents to co-sign only if they absolutely need to, and parents should agree to co-sign only if they absolutely could afford to make the debt payments.”
There are a few things that should be discussed before becoming a co-signer. Before taking out a loan, the student should plan how the funds are going to be paid back. There should also be a plan in place if the student can’t make the loan payments. Most importantly, parents are cautioned to consider other alternatives before settling on becoming a co-signer. It is important to keep in mind that once the student has a stable income, it is wise to remove the co-signer from the loan. Otherwise there may be severe consequences for the individual. A report by the Consumer Financial Protection Bureau, found that if the co-signer dies or files for bankruptcy, the student could be responsible for making the remaining balance of the loan payment in full. Co-signing can surely help a student in need, just be sure to consider other options and consequences before making the decision.
February 8th, 2010
If you are refinancing or borrowing to purchase a home, loan cost is not the only issue to consider.
There has been a lot of publicity lately regarding the changes to the Real Estate Settlements Procedure Act which are designed to make it easier for borrowers to “shop” among lenders in order to obtain the very lowest cost loans. I would like to point out that cost should not be your only concern. Clients who have come to me after their loan closing with problems all seem to have their loans with huge national banks. These banks, perhaps understandably given the volume they face, have problems tracking payments, loan assignments, and other matters. One client, who had never been late or missed a mortgage payment, was accused by his national lender of missing one month’s payment. They told him that if he did not pay it immediately or provide proof that it had been paid, they would begin foreclosure proceedings. He had to do all of the legwork to prove that they received and cashed the payment, and he still had to wait “up to 45 days” for the bank to agree. He was told that there were other borrowers in the same position regarding the same month, and that the problem may have arisen from the bank’s purchase of a loan portfolio, but nonetheless, the burden was on him to prove that the lender received the payment. Similar problems arise when there is a need to prove that a mortgage with the national lender has been paid in full. Again, it is usually up to the borrower to prove to the lender that he made all of the payments, even if it has been years since his final payment.
I have also seen that national banks (by the way, I do not include HSBC or M&T in this category for the purposes of this entry) have not treated our clients, who are experiencing financial difficulties, in an understanding or humane manner. Most of our clients are content with the way they have been treated by their small, local lender. It has been my experience that local lenders are very understanding and willing to help resolve foreclosure and payment issues. I have not spoken with any big bank client who feels they have been well or fairly treated.
So, if you are refinancing or borrowing to purchase a home, give some additional consideration to your smaller local bank.
January 21st, 2009
The current economic chaos and uncertain future has negatively impacted many industries and people. Some businesses are filing for bankruptcy and others are seeking relief through bailout plans. The average person has probably suffered significant investment losses especially relative to their 401k or other retirement plan. Even worse,