The loan arranger

[vvvexation]

I'm being plagued by message after message suggesting that I consolidate my student loans--specifically, that I consolidate them NOW! in order to LOCK IN THIS SPECIAL LOW RATE! This sounds shady to me, but even the government website where I'm trying to conduct my mandatory exit interview is linking me to these folks. Are they less shady than I think? Would it actually be a good idea to do this? Would it really lower my interest rates?

Comments

[danaeris.livejournal.com]

Loan consolidation can be a blessing or curse. It does lock you into an interest rate. Since some interest rates are variable (Direct loans are, perkins loans aren't), payments change, which can be frustrating to budget for. If you have different types of loans, you also have different bills. Consolidating them will lead to fewer bills, and a lower monthly bill.

The interest rates could go higher, which would of course be bad for you, and thus, good to consolidate. They could also go down, in which case consolidation would have been a mistake. Of course, then they could go up or down again! So you see, its hard to tell what the best decision is.

The other thing to keep in mind is that your loans as they are can be deferred and/or forgiven for services such as teaching. If you think you are likely to take advantage of these, this may not be the right decision.

As far as special low rates, the Direct Loan rates go up every year on... I think it's May 30. So you have nearly a year to lock in at THIS rate if you're dealing with a Direct Loan.

I was going to consolidate, since the last time interest rates changed, it was definitely for the worse. But I didn't get my act together in time. *shrugs* Your decision!

[vvvexation.livejournal.com]

Hmmm. I have Direct Loans and I think that's all I have, and the job I just started might qualify as teaching if I get hired permanently. If I read you correctly, that means I might not want to consolidate at all, and furthermore that I could just as easily do it later if I do want to, which in turn suggests I shouldn't bother to do it now.

[gatopreto.livejournal.com]

Having just gotten a mortgage (which, if memory serves me, translates as 'death payment'), I was distressed to find out how much our bank had sold us down the river to direct marketing. We had not made a single payment and we had a dozen letters to consolidate our debt or lower our payments in our mailbox. Freaky.

I think the generic advice is to look before you leap. If it sounds too good to be true, it probably is.

[bk2w.livejournal.com]

It's not always the bank that's done the selling down the river. A lot of marketing companies have people trolling the public property records looking for recent mortgages. They can get copies of your Deed(s) of Trust and from there, your name, address, mortgage total, etc.

[gatopreto.livejournal.com]

Yeah, that makes sense. My initial thought it may be the bank was that most of the mail is addressed to:

(my name)
(my mortgage bank)
(my address)


Congrats to youse on closing. meristem and I just closed in SF and are in the (long) process of moving and unpacking.

More disturbing than the mortgage mail was one of my new neighbors confronting me with "Wow, you paid $X, that's a lot!" after asking me how many people were moving into the house. She has a reputation for a lack of tact, according to my other neighbors. It's so nice of the real estate agent to send postcards to all of your neighbors . . .

[ef2p.livejournal.com]

When your deed is filed in the county office of records, it include information about any liens on the property. The lien info include the lender's name, the sales price of the house and frequently a bunch of other information.

If you ever refinance it changes the lien information and you'll get a whole new pile of offers.

The funny thing for me is half the time they advertize a low (varible) interest rate, that starts higher than my 10 year fixed rate home loan.

[bk2w.livejournal.com]

Consolidating has another way of lower your monthly payments: reseting the repayment clock. Stretching the same remaining loan over a longer period also has the not so nice effect of increasing the total interest paid.

[vvvexation.livejournal.com]

I'm confused: are you saying consolidating generally includes lengthening the grace period, or what?

[(Anonymous)]

It usually resets the length of repayment. My student loans were scheduled to paid over 10 years, starting 6 months after I graduated. Consolidating a year into repayment (9 years left) would reset the repayment schedule back to 10 years. If you're still in the 6 month grace period then you probably don't care about this detail.

[vvvexation.livejournal.com]

Ah. Well, it'll probably be six months to a year till I consolidate if I do it at all, so that does make a difference but I guess not much of one.