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The Loans Issue

The Loans Issue. Principles Discussed. Debt Consolidation Loans Mortgage Loans Home Equity Loans Auto Loans Education Loans. Debt Consolidation Loans. Combine most or all current debt into a single new loan Goals Lower overall interest rate Lower overall payment(s)

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The Loans Issue

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  1. The Loans Issue

  2. Principles Discussed • Debt Consolidation Loans • Mortgage Loans • Home Equity Loans • Auto Loans • Education Loans

  3. Debt Consolidation Loans • Combine most or all current debt into a single new loan • Goals • Lower overall interest rate • Lower overall payment(s) • To be successful, consumer must change spending and saving habits

  4. Mortgage Loans

  5. Understanding Mortgage Loans • Long-term loan for purchase of a property and/or house • The property or the house and land on which it is located serves as collateral for the loan • Foreclosure possible if payments are not made

  6. Understanding Mortgage Payments Principal • The loan balance Interest • Interest owed on that balance Real Estate Taxes • Taxes assessed by different government agencies to pay for school construction, fire departments, etc. Property Insurance • Insurance coverage against theft, fire, disasters, etc.

  7. Fixed Rate Mortgage • Interest rate and payments remain essentially the same for the life of the loan • Very affordable when interest rates are low • Usually 15- or 30-year loan terms

  8. Adjustable Rate Mortgage • Interest rate and payments fixed for an initial period, then may be changed • Interest rates typically start low, but usually rise significantly • Can be useful if the borrower plans to sell early

  9. Kinds of Mortgages • Interest-only Loans • Jumbo Loans • Assumable Mortgage • Construction Mortgage

  10. Home Equity Loans

  11. Home Equity Loans • A home’s equity is the collateral • Home equity loan • One-time lump sum loan • Home equity line of credit (HELOC) • Revolving credit like a credit card • Amount and time limit set by lender • Interest rates and payment amounts vary during life of loan • Balance is payable when house is sold

  12. Auto Loans

  13. Understanding Auto Loans • Decide on the car you want • Research on the internet • Make sure your credit report is accurate • Shop loan rates in a limited period of time

  14. Shop for Financing • Bank • Internet • Credit union • Dealer • Home equity loan

  15. Education Loans

  16. Understanding Education Loans • Apply for scholarships and grants before turning to loans • Loans must be repaid with interest • Loans for consideration: • Student loans • Parent loans • Private education loans

  17. Education Loans • Stafford Loan • Perkins Loan • PLUS Loan • Private Education Loans

  18. Applying For Loans • Free Application for Federal Student Aid (FAFSA) • Procedure • Deadlines • Expected Family Contribution • www.fafsa.ed.gov

  19. Questions First Command Educational Foundation 1 FirstComm Plaza Fort Worth, TX 76109-4999 Toll Free: 1-877-872-8289 www.fcef.com

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