Construction Loan

Many people prefer to custom-design their own home, perhaps because it's too difficult to find a home that meets all their needs or because they want a brand-new home. A construction loan is a loan that finances the building of that new home.

Construction loans are different from your standardized mortgages usually underwritten by Fannie Mae and Freddie Mac. They are different because the lender has to know the "story" behind the planned construction before it will be willing to lend money to the borrower.

They also don't pay out all at once. Borrowers usually get between five and 10 draws which coincide with certain stages of construction such as:

• Pouring the foundation
• Framing
• Installing heating and cooling systems, wiring, and plumbing systems
• Installing cabinets, flooring and fixtures
• Finishing work (painting, carpeting, etc.)

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Student Loans

An education loan is a form of financial aid that must be repaid, with interest. (Scholarships, on the other hand, do not have to be repaid.)

Education loans come in three major categories: student loans (e.g., Stafford and Perkins loans), parent loans (e.g., PLUS loans) and private student loans (also called alternative student loans). A fourth type of education loan, the consolidation loan, allows the borrower to lump all of their loans into one loan for simplified payment.

Few students can afford to pay for college without some form of education financing. Two-thirds (65.6%) of undergraduate students graduate with some debt, and the average federal student loan debt among graduating seniors is $19,202 (Stafford and Perkins Loans), according to the 2003-2004 National Postsecondary Student Aid Study (NPSAS). (The median is $17,120. One quarter of undergraduate students borrow $24,936 or more, and one tenth borrow $35,193 or more.) These figures increase by about 3% or approximately $550 a year. When one includes PLUS loans in the total, the average cumulative debt incurred is $21,814. (Approximately one in ten (10.7%) parents borrow PLUS loans for their children's college education, with a cumulative PLUS loan debt of $16,218.)

Graduate and professional students borrow even more, with the additional debt for a graduate degree ranging from $27,000 to $114,000. The following table shows the percentage borrowing and average amount of cumulative debt among graduating students according to degree program. It provides the amounts borrowed for just the graduate education and also the combined totals for undergraduate and graduate education. Additional information for student loans can be found at Finaid

Alternatives to Payday Loans

There are other options. Consider the possibilities before choosing a payday loan:

• When you need credit, shop carefully. Compare offers. Look for the credit offer with the lowest APR - consider a small loan from your credit union or small loan company, an advance on pay from your employer, or a loan from family or friends. A cash advance on a credit card also may be a possibility, but it may have a higher interest rate than your other sources of funds: find out the terms before you decide. Also, a local community-based organization may make small business loans to individuals.
• Compare the APR and the finance charge (which includes loan fees, interest and other types of credit costs) of credit offers to get the lowest cost.
• Ask your creditors for more time to pay your bills. Find out what they will charge for that service - as a late charge, an additional finance charge or a higher interest rate.
• Make a realistic budget, and figure your monthly and daily expenditures. Avoid unnecessary purchases - even small daily items. Their costs add up. Also, build some savings - even small deposits can help - to avoid borrowing for emergencies, unexpected expenses or other items. For example, by putting the amount of the fee that would be paid on a typical $300 payday loan in a savings account for six months, you would have extra dollars available. This can give you a buffer against financial emergencies.
• Find out if you have, or can get, overdraft protection on your checking account. If you are regularly using most or all of the funds in your account and if you make a mistake in your checking (or savings) account ledger or records, overdraft protection can help protect you from further credit problems. Find out the terms of overdraft protection.
• If you need help working out a debt repayment plan with creditors or developing a budget, contact your local consumer credit counseling service. There are non-profit groups in every state that offer credit guidance to consumers. These services are available at little or no cost. Also, check with your employer, credit union or housing authority for no- or low-cost credit counseling programs.
• If you decide you must use a payday loan, borrow only as much as you can afford to pay with your next paycheck and still have enough to make it to the next payday.

Article is quote from Ftc.gov

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