BackEndLoan.com

indeed, that which, next to virtue, truly and
essentially raises one man above another – Joseph Addison

There is little doubt that purchasing a new home is one the
biggest financial decision most people face but finding the
right house that you can call home is becoming an increasingly
difficult task.

Step one in the home ownership process is getting pre-qualified
for a loan. When you get pre-qualified for a loan the lender
works backwards to determine the biggest loan that you qualify
for according to your income, credit and current outstanding
debt.

How do they do it? Here is brief overview=85

First off, you need to remember that only income that can be
documented is considered income when it comes to determining
how much you qualify for. If you can’t provide a lender with
proper documentation of your income then they won’t used it.

For example, if you get paid by the hour and work little
overtime or if you get paid on a salary then determining income
is pretty easy. If you are paid monthly your income is
multiplied by 12 and if you get paid every couple of weeks it’s
multiplied by 26 and so on.

On the other hand, it gets more difficult if you work a fair
amount of overtime or receive bonuses and commissions because
that income varies. The normal process for borrowers that fall
into this category is that the loan officer will simply use
previous one or two years W2 income and combine that with the
past few months actual wages from you pay stub and then average
that total income to arrive at your current monthly income.

For self-employed or 1099 borrowers income is pretty much
determined by what your net income indicates from you tax
return. Even if you make $75,000 a year but due to expenses and
write-offs your tax return shows that you make $30,000 then
$30,000 is used to determine how big a loan you can afford or
qualify for.

However, over the past few years lending institutions have
becoming increasingly creative on how they approve borrowers
for loans, especially those borrowers with a bad credit
history. Many programs require less income documentation and in
the case of a loan programs like “stated” or “no documentation”
no income documentation is required.

In summary, with the rapid increase in home values over the
past few years pricing many families out of the home market,
the good news is that the resulting “easing” of lender
requirements has helped offset this by making it much easier to
qualify for a mortgage and get into the home of your dreams.

For options in finding the best mortgage, new or refinance,
check out the links below.

About The Author: Visit http://www.eyeonsubprime.com or
http://www.eyeonsubprime.com/links.html or
http://www.eyeonsubprime.com/sitemap1.html for more information
on loan options.

Please use the HTML version of this article at:
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Student Loans 101
Copyright (c) 2007 Bernard Pruett
SecureLoanConsolidation.com
http://www.SecureLoanConsolidation.com

Student loans have become a common form of financial aid, giving
prospective college students the opportunity to further their
education. What’s even better is that college student loans now
come in a variety of shapes and forms to appeal to more college
candidates that have different needs and qualifications.

The United States Government works hard to provide eligible
students with an equal chance to gain access to federal student
loans regardless of bad credit or past financial hardships.
Private student loans are also offered to students through banks
and other financial institutions based on specific criteria, such
as financial need and grade point average. Student borrowers
also have the option of student loan consolidation as these loans
mature. Although there are distinct differences between federal
student loans and private student loans, some pros and cons
common to all college student loans are covered below.

A student loan is similar to any other type of loan in that it is
money borrowed from a lender that has to be repaid in
installments over a specified period of time. Like other
standard loans, there is a cost associated with borrowing money.
An interest expense is charged on the student loan by the lender
that has to be paid in addition to the principal loan amount.
Although student loans and conventional loans have various
similarities, there are some features that make college loans
exceptionally more appealing to borrowers (i.e. students and
parents) compared to standard loans.

One key benefit associated with student loans is that interest
rates are significantly lower than interest rates charged on
standard loans. This helps to alleviate the financial burden on
students who are typically at an age where income is limited.
Other than competitive interest rates, lenders generally offer
flexible student loan repayment terms that help delay the
financial pressure on students, by allowing them to wait until
after graduation to start repaying the loan. Both federal
student loans and private student loans generally give students a
6-month grace period, meaning that students don’t have to start
repaying their loan until 6 months after graduation. The grace
period gives students adequate time to get settled into a new job
and start earning a salary that is sufficient enough to meet
monthly student loan payments.

Another advantage associated with both federal student loans and
private student loans is the tax savings provided to students and
parents. Students and parents who pay tuition fees for higher
education are subject to tax benefits that (1) decrease their
income subject to tax and; (2) provide tax credits. Tax credits
basically result in a decrease in the amount of tax you are
required to pay by the Internal Revenue Service (IRS) at the end
of your tax period. Thus, tax benefits are another feature that
helps ease the monetary demands of student loans.

Although student loans relieve college students of financial
burden in the short-term, the long-term financial burden that
emerges after graduation can be extremely overwhelming for those
who do not prepare themselves. The average student debt is
estimated to be around $17,000 and the typical loan repayment
period can last anywhere from 10 years to 30 years. These
figures are no exaggeration and can be very daunting for someone
just entering the career world. Some college graduates simply do
not know how to fathom the fact that they owe such a large amount
of money and end up overlooking their obligation to pay off their
student debts. Other college graduates with newly found jobs
simply do not know how to budget their income in a way that
allocates sufficient funds to meet their monthly student loan
payments. The result of these scenarios, where college graduates
are irresponsible about paying off their debt obligations, is a
severe burn to one’s credit rating.

Along with other major consequences, college graduates that have
a series of missed payments and/or late payments on their student
loan plans can cause severe damage to their credit score. Your
credit score is an important aspect of your financial identity,
especially as you get older and start earning an income
sufficient enough to rent or invest in real estate and other long
term assets. Having bad credit can seriously hinder you from
financial endeavors in the future, such as getting approved for
direct loans and mortgage loans. Financial responsibility is
extremely beneficial for all individuals to learn and practice at
a reasonably young age to prevent problems in the future.

Budgeting wisely is an important step one can take to achieve
financial responsibility. As soon as you enter into the career
world, you should immediately write out a budget that allocates
sufficient funds to pay for all your monthly expenses, such as
your rent or mortgage, car loan payment, student loan debt, food,
gas, and insurance. After you have assigned money to cover your
immediate monthly expenses, you should then create a savings fund
and allocate approximately $50 to $200 per month to the fund. A
savings fund is very useful in unexpected emergencies, such as
hospital bills and car repairs, and helps ensure that money is
available when needed in urgent situations. Students, student
graduates, parents, and other borrowers need to understand the
importance of financial responsibility and keeping up with
monthly payments, in order to build a healthy credit report for
the future.

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Bernard Pruett writes for http://www.SecureLoanConsolidation.com
Visit their website to learn about student loans
(http://www.secureloanconsolidation.com/student_loan) and
(http://www.secureloanconsolidation.com/calculators.asp)
student loan consolidation. Their network of debt loan
lenders provide college financial aid, loan consolidations,
bad credit debt help, home loans, etc.

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