Why do you need a student loan? What is a better option?
A student loan, also known as an education loan, is a type of loan made to students or their guardians to pay for post-secondary education.
These may be from government funds, from private individuals via banks and other financial institutions, from corporations in the form of educational assistance provided primarily to employees and their dependents, or from some combination of these sources. When you take out a student loan you must repay it at required intervals with interest. If you fail to do so the lender can sue you if they choose.
Less common forms of education funding include scholarships (which are basically gifts - no repayment expected), stipends (paid on a monthly basis), and loans from employers or families which need not be repaid.
A student loan is an agreement between a borrower and a lender, where the lender agrees to provide a specified amount of money under agreed terms and conditions, specifically for the purpose of funding a student's post-secondary education. Students must repay their loans or they will face large interest charges and may lose any professional license they hold.
To put it into perspective; in most cases, you can expect to pay back twice that of what you borrow if you want to graduate debt-free (and most people don't). So if you take out $20,000 you're looking at repaying closer to $40,000 when all is said and done. That's an average 6% interest rate with current inflation rates.
What Is a Cornerstone Loan?
A cornerstone loan is, as the name implies, a loan that provides a foundation for your investment. While there are other loans to choose from, this one is designed expressly for the purpose of building wealth through real estate investing. Cornerstone loans have been around for over 30 years and still remain popular with borrowers who want to ensure security and stability in their investments.
The cornerstone loan is offered by Cornerstone Education Loan, a private lending firm that provides loans for higher education and acts as a trustee and servicer of its loans. It offers an alternative solution to parents who want to finance their children's college expenses and students who do not qualify for federal aid but cannot afford the high interest rates charged by most lenders.
It has provided thousands of loans since 2007 and has helped many students pursue their dreams without burdening them with debt before they've even begun their careers. The loan program focuses mainly on undergraduate studies through both traditional four-year colleges and two-year community colleges.
At the time of application, applicants should be:
- At least 18 years old and in a position to apply for college;
- A US citizen or permanent resident;
- Enrolled at an accredited academic institution in the USA; and, must be continuously enrolled throughout the period of study supported by this loan agreement. And they should show financial need (i.e., not be able to afford tuition without support from loans).
Students must also clearly state their plans for pursuing postgraduate studies before applying for a Cornerstone Education Loan. This is because all applicants will have to sign an agreement to use any proceeds received toward undergraduate studies only unless they are making provisions for future postgraduate programs through a separate agreement.
Whenever you invest any kind of money into something that will generate greater returns, it's always best to protect your initial investment as much as possible. This particular loan comes with many features that can do just that:
There Is No Down Payment
The first big benefit of a Cornerstone mortgage is that you don't have to make a down payment on the purchase of the real estate. The lender will cover all closing costs and fees, and you can get to your money faster with a longer-term (30 years) than standard 15-year mortgages. Even though there is no down payment required, you still get 100% financing for your purchase.
This Is A Fixed Rate Loan
Another positive feature of this loan is that it comes with a fixed rate. With the ongoing fluctuations in market conditions, many investors seek this kind of stability in their investments. You'll also receive guaranteed mortgage insurance which protects lenders against loss on any defaults throughout the term of the mortgage contract.
While most loans come with an adjustable-rate, one-time fees associated with refinancing and other added expenses may be lower than what you might anticipate when you think about mortgages in general.
There Are No Appraisal or Inspection Fees
One of the most important benefits of a cornerstone loan is that there are no appraisal or home inspection fees required with this type of loan. This is a big saving for anyone thinking about investing in real estate because it means you don't have to pay for a third-party evaluation before finalizing your purchase.
With this particular mortgage, you get 100% financing from start to finish, with closing costs and all included upfront.
In addition, anytime you're buying an investment property, the seller is likely going to want all inspections and appraisals completed by their own agents before they will agree on terms of sale. If the seller isn't willing to cover these costs, most times they will also include them in the final price of their property.
The Lowest Interest Rates
Another major benefit of this loan is that it comes with very low-interest rates when compared to other forms of financing. While the fees are higher than if you use the money for a personal purchase or credit card, you also have access to cash that would otherwise be tied up in savings accounts or CDs. Plus, there are no undisclosed finance charges associated with this type of loan.
Many investors choose cornerstone loans over standard mortgages because they feel it offers greater security in their investments. They can have peace of mind knowing all closing costs and fees are already included before they move forward with any kind of investment.
They Are The Most Affordable
When compared to other kinds of loans, Cornerstone mortgage loans are also among the most affordable because you don't have to come up with down payments. Plus, there is no risk for an early payoff unless you want to refinance or pay back your loan earlier than scheduled.
You'll also save money on interest charges by having a fixed rate over the term of your loan, rather than paying variable interest rates that can rise and fall with market conditions. The low fees associated with this type of loan mean you will recover the costs involved in buying real estate at much faster rates than if you took out standard cash advances or open credit lines.
Peculiarities
A Cornerstone loan service for students is considered to be special because:
- No down payment is required
- The lender covers closing costs and fees
- The loan includes mortgage insurance for lenders against loss on defaults throughout the term of the loan agreement
- Has a fixed rate with guarantees
- There are no appraisal or inspection fees involved in this kind of investment. You also have access to cash that would otherwise be tied up in savings accounts or CDs.
What are the disadvantages of a student Cornerstone loan?
- It is available for students only
- You need to have a cosigner if you are a student and want the lowest interest rates on your Cornerstone loan.
- A prepayment penalty is applicable
- There are some restrictions on how much you can borrow. You must have at least $100 to open the account online.
What's the lowest rate I can get with a non-student Cornerstone loan?
With a non-student Cornerstone mortgage, you can expect very low-interest rates which will be competitive with other low-rate loans. Rates will vary based on current market conditions, so it's best to contact your local lender for exact quotes.
The application process should also be quick and shouldn't take more than 24 hours or so to complete. If you're interested in getting the lowest possible rate on either type of this investment, it's recommended that you contact a lender directly for more information.
What are the fees that come with Cornerstone loans?
There are several different fees associated with this type of investment, including appraisal fees, title search services, and other costs needed to do due diligence before you commit to the final terms of sale. These are all included so you don't have any surprise expenses at closing time or later down the road.
If your real estate project requires additional financing investments from local banks, there may be some additional loan document preparation fees involved in order to comply with federal laws regarding disclosures about lending practices. It's these extra charges that help keep rates competitive when compared to other types of mortgage investments.
You can estimate that these extra costs should equal no more than 2% or 3% of the total loan amount.
What are other options for a student loan?
There are several options for students if they want to apply for a loan. The best option is determining what you need the money for and then choosing the type of loan that's most appropriate.
Line of credit: this can be an unsecured line of credit, where you receive a certain amount and decide how much you will pay back each month until it runs out or you choose not to borrow any more money. This is best used as a short-term solution so the interest won't cost as much. It should only be used when necessary because the fees accumulate quickly if the balance isn't paid off monthly.
Loans from your parents or family members: this has to be done with absolute trust because there is no legal contract involved. This is usually done with loans of more than $1,000. The drawbacks are that the rates will probably be higher because there's no legal protection for the lender if you die or can't pay.
Loans from friends: this is allowed as long as you have a signed contract with the terms on how much money is loaned and at what rate. You must repay it on time, or a friend could ask for repayment immediately.
Student loans first: if you don't have any other options, then take out student loans first before taking out Cornerstone loans. Once these federal student loans are paid off later in life, then take out Cornerstone funds to actually buy property or investments that can generate income each month.
How do you get a loan from Cornerstone Bank?
To get a loan from Cornerstone Bank, visit this site for application information along with current interest at various levels so borrowers can decide if this is the right type of loan for them.
Bottom line
Just like any type of loan, you will need to make sure that the interest rates are competitive when compared with other loans in the market. It's also important to consider and look into all fees associated with this account before signing any type of contract.
Any time you can get a low rate, it reduces your risk and makes it easier to meet future financial obligations. Just be aware that there is always some type of catch or hidden fee which usually works just fine for lenders because most people don't pay close enough attention when signing the initial contract so they'll agree to anything without properly reading all terms.