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GREENPATH NEWSLETTER

JULY 2016

Top 5 Mistakes Millennials Make with Student LoansBy Nick Demeester GreenPath Student Loan Counseling Manager If you are a recent graduate or young professional, or know of someone in a similar situation, odds are they have some form of student loan debt. They could be overwhelmed with the idea of how much they owe and are struggling to make payments. Like many other millennials, they may be strapped for cash and do not know how to make any progress. Being short on money and facing debt can be scary, and it can lead to making mistakes. These common errors can end up costing thousands of dollars and even harm one’s financial future. GreenPath has compiled five millennial mistakes, when it comes to student loans: 1. They underestimate their payments. According to a recent study, 60% of students underestimate their monthly student loan payments and how much of their income will go towards their debt. After graduation, they may have gotten their first apartment or car. If they did not account for student loan payments, their budget would be blown and would risk defaulting on their loans or missing rent and car payments. 2. They do not know their interest rates. In the same study, 30% of students were not aware of their interest rates. The interest rate has a huge impact on how much money will be paid back over time. A higher interest rate can add thousands of dollars to a balance. There are ways to bring the rate down; for many loans, setting up automatic payments can shave the percentage down by .25%, and when a certain amount of payments are made on-time, they will be awarded with another .25% discount on interest. While that may sound tiny, it can add up to significant savings. More of the money can go towards the principal, instead of interest.

3. They are not aware of their

repayment options. Nearly 30% of millennials with student loans are currently in default. However, a huge portion of people missing payments had other repayment options they did not use. Approximately half of those millennials who missed payments were eligible for modified repayment plans, based on income, meaning their payments could have been much lower and more affordable. Understanding options can help stretch dollars and keep from getting behind on loans. 4.They miss out on valuable tax deductions. Many recent graduates do not realize that their student loan interest is tax deductible, and they pay more money than they should. If they’ve been making student loan payments, they can lower their tax bill by deducting up to $2,500 in student loan interest on their taxes. 5. They do not know where to go for help. Many young professionals do not know that they can get help for managing their student loans. If they cannot afford payments, don’t know which student loan payment plan is best for their current situation, or are considering consolidation, a trained professional can help navigate the process and come up with a comprehensive plan for moving forward. By understanding options, they’ll be empowered to start building a more secure future. Student loans can be overwhelming. But, with some research and planning, the debt can be paid down, allowing one to start saving for other needs. For more information, reach out to GreenPath’s student loan experts at 877-337-3399 or check out our website at www.greenpathref.com, then click on “Student Loan Counseling”.

greenpathref.com | 1-877-337-3399

GREENPATH NEWSLETTER

When you owe more on your mortgage than your home is worth, it can be difficult to find a lender willing to help you refinance. But for borrowers who have remained current on their mortgages, there is hope. It’s called the Home Affordable Refinance Program (HARP). Introduced in March 2009, HARP enables borrowers with little or no equity to refinance into more affordable mortgages without new or additional mortgage insurance. HARP targets borrowers with loan-to-value (LTV) ratios equal to or greater than 80 percent and who have limited delinquencies over the 12 months prior to refinancing. Your loan must be owned by Fannie Mae or Freddie Mac, which own most of the loans in the U.S. According to the Federal Housing Finance Authority, more than 3.3 million Americans have refinanced through HARP, and they estimate that another 367,000 homeowners are eligible at this time. In states like Florida (51,100), Michigan (28,825), and Illinois (32,169), the number of HARP eligible homeowners is significant.

In June, we launched a new closed Facebook group exclusively for GreenPath clients. In our first month, more than 100 clients have signed up! Already, people have shared ways to save money, exchanged tips on ways to stay on their monthly budget, and encouraged one another. If you have a Facebook account, simply request access at https://www.facebook.com/groups/GreenPathFriends. We will confirm and then you can jump right in!

Through HARP, you can get a lower interest rate (which means less out-of-pocket costs each month), get a shorter loan term, or change from an adjustable to fixed-rate mortgage. There’s no minimum credit score needed, either. For many borrowers, the advantages are huge: • Securing a fixed-rate mortgage that won’t change over time • Building equity faster, with a shorter term • Lower closing costs because an appraisal is not usually required The end date to get a HARP refinance is December 31, 2016. With mortgage rates continuing to remain at historically low levels, you might want to consider HARP. In 2014, the average HARP borrower reduced their monthly payment by $179. That can really add up! GreenPath housing counselors are experts on HARP, and can help explain eligibility guidelines. For more information, call GreenPath Housing at 877-337-3399 or log on to www.greenpathref.com and look under “Housing Counseling Services.”

Because this is a closed, private group, you will be able to interact with clients like yourself in a non-judgmental atmosphere. Find out what’s working for others, share your successes, offer support to clients just starting out, ask questions, and receive feedback and tips. If you have questions or ways we can make your GreenPath experience better, please email us at suggestions@greenpath.com.

Government Mortgage Program Expires in December

Financing Your New Home and Closing the Loan - Wednesday, July 27 at noon ET Join us as we take a closer look at the fundamentals of financing a home, including applying for a loan, loan types and terms, and mortgage specifics. We’ll also talk about what to expect at the closing, what to bring, who will be there, causes of delay, and some helpful tips as you move into and care for your new home.

To sign up for any of these personal finance webinars, log on to www.greenpath.com/gfw-webinars.

As the housing market continues to heat up this summer across the country, many people are looking to buy a new home, whether they are upgrading, downsizing or somewhere in between. Join us in July as we look at mortgage specifics, loan types and other expenses associated with buying a house. Budgeting to Buy - Wednesday, July 13 at noon ET There are many things to consider when looking to purchase a home. During this presentation we will discuss subjects such as upfront costs, how much you can really afford, finding the right home, shopping for your loan and a general overview of the closing.

July Webinars Take a Look at Home Buying

GreenPath Facebook Financial Wellness Friends Hits 100 Members