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John F. O'Hara

John F. O'Hara
731 W Skippack Pike  Blue Bell  PA 19422
Phone:  610-277-4060
Office:  215-643-3200
Cell:  267-481-1786
Fax:  267-354-6973

My Blog

5 Ways Students Can Avoid Borrower's Remorse

July 20, 2015 1:12 am

With no end in sight for tuition rate hikes, funding a higher education has become one of the most challenging financial issues for Americans. Students relying on loans have the added burden of paying off debt after graduation – and many aren’t even sure where to begin. To avoid borrower’s remorse, keep in mind these tips from the experts at Edvisors.com.

1. Exhaust free money first. By the time loans are repaid in full with any interest, it typically costs students about two dollars for every dollar they borrow. Rely on free aid first, such as grants, scholarships and education tax benefits. Consider earned income, such as student employment, education awards for volunteer service, employer tuition assistance or military student aid as options, as well. If you must borrow, consider a short-term tuition installment plan, instead of long-term debt.

2. Avoid taking on too much debt.
Families should only take on as much debt as they can afford to repay student loans in ten years or less. A good rule of thumb is to keep student loan debt at graduation less than the student’s expected annual starting salary – ideally, a lot less.

3. Borrow federal student loans before private ones. Always borrow federal student loans first because the loans are less expensive, more available and have better repayment terms and conditions than private student loans.

4. Know the difference between fixed and variable interest rates. Fixed interest rates remain unchanged for the life of the loan, while variable interest rates may change periodically. Even if the interest rate on a variable-rate loan is initially lower than the interest rate on a fixed-rate loan, the variable-rate loan may ultimately be more expensive if the interest rate increases significantly over the life of the loan.

5. Understand the consequences of cosigning. Cosigning a loan may help the borrower qualify for a loan and may reduce the interest rate. But, a cosigner is also a co-borrower, equally obligated to repay the debt. The cosigned loan will be reported on the credit history of both the borrower and cosigner. This may affect the cosigner’s ability to qualify for other debt, especially if the borrower is late with a payment or defaults on the loan.

Source: Edvisors.com

Published with permission from RISMedia.


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Credit Seekers See More Approvals, Fewer Rejections

July 20, 2015 1:12 am

As the economy continues to stabilize, more Americans are experiencing improvement in credit application rates and credit rejection rates, including those of mortgages and mortgage refinances, reports the Federal Reserve Bank of New York. According to the Bank’s recent SCE Credit Access Survey, there are now more successful applicants and fewer rejected and discouraged credit seekers. Thirty-four percent of survey respondents who were credit applicants in the last 12 months were granted credit; a mere 8.1 percent applied and were rejected. Approximately five percent of survey respondents were too discouraged to apply, despite indicating a need for credit.

Application rates increased slightly for all credit types: mortgage, mortgage refinance, credit card, credit card limit increase and auto loan. The most noticeable increase was seen in those aged 40 or younger.

In addition, survey respondents reporting a voluntary credit account closing or credit limit reduction in the past 12 months dropped to 13 percent. Involuntary (lender-initiated) credit account closings or credit limit reductions remained within the 3-4 percent range seen at the onset of the recovery.

Survey respondents indicating the likelihood of applying for a mortgage in the next 12 months increased to record highs. The likelihood of a credit application being rejected, conditional on applying, fell for mortgages and increased slightly for mortgage refinances.

Source: Federal Reserve Bank of New York

Published with permission from RISMedia.


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