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‘As for what we need?’ Housing, services and support, say those experiencing homelessness in Spokane

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Five years ago, Ken Vansant would take his grandkids the long way just to avoid “the bums.” He never expected to find himself in a similar situation.

“I would go an extra block around the corner because I didn’t want them to go by and see the bums,” Vansant said. “When I got here (at the Union Gospel Mission men’s shelter), you get to know these guys really had real jobs, like I did. They’re not bums.”

Many homeless people want to work. They want to pay taxes. They want to eat a burger at Red Robin.

They have hopes, dreams, wants and needs, just like a housed person. And they’re tired. Just ask Dixie Todd, who was homeless for more than 20 years.

“You go through a lot of filters of other people’s perceptions and misconceptions. And by the time you run through all that, it’s worn down your armor,” Todd said. “Your self confidence will wax and wane.

“As opportunities come and go you’ll be just too exhausted to take advantage of something. And so something goes by you, not because you weren’t aware of it, but because you just had nothing left to go do it.”

Even the term “homeless person” is misleading. It implies permanence. But many people fluctuate in and out of homelessness. One day they’re in an apartment, the next they’re on the street. One day they’re in the shelter with every belonging in a single suitcase, the next they’re moving into permanent housing.

And people experiencing homelessness are sharply cognizant of the barriers they face in obtaining housing, even when they’re unable to surmount them.

The city’s new mayor, Nadine Woodward, has pledged to embark on a new approach to homelessness that will begin with the formation of a work group. In anticipation of that community discussion, The Spokesman-Review reached out directly to people who have experienced homelessness in Spokane to hear what challenges they face and what solutions they have to offer.

Affordable housing

For every 100 apartments in Spokane County, fewer than two are available to rent.

The tight real estate market in Spokane has become increasingly evident as the city’s population continues to grow and its economy thrives. No population feels the impact of that economic success more than the homeless, who struggle to secure an apartment to rent and can wait months just to hear back from a prospective landlord.

They face roadblocks like a lack of identification, long waitlists for subsidized housing, and trouble making their way through the application process due to bad credit or other red flags in their personal history.

Kelly, who requested her last name be withheld to protect her identity, became homeless after leaving an abusive boyfriend. She soon found Jewels Helping Hands in the city-owned Cannon Street warming center, where she now lives and works.

Saving money for a new apartment is the long-term struggle Kelly faces, but the cost of even searching for an apartment can be prohibitive, she said.

“There’s no place to rent, period. And they want $100 for every application fee, and that’s ridiculous. I can’t afford that. And no, no one else can either,” Kelly said.

Spokane City Council President Breean Beggs hopes a package of housing-related laws, expected to be introduced in March, will make obtaining – and keeping – an apartment easier. It could include a standardized background check system so that applicants are not paying fees to multiple landlords, he said. Additionally, he hopes the city will implement an already-funded microloan program that would, at a low interest rate, help the financially disadvantaged pay a deposit on a new apartment.

As of fall 2019, the apartment vacancy rate in Spokane County stood at 1.8% overall, and 1% for both one- and two-bedroom apartments. Anything below 5% is generally considered a tight market, according to the University of Washington’s Center for Real Estate Research, which compiles the data.

A lack of affordable housing and evictions were among the most common reasons people cited as the cause of their homelessness, according to a survey included in the city’s annual Point in Time Count in 2019. A lack of a job, a lack of income or a family conflict also were frequently cited.

A past eviction is an immediate deal-breaker for many landlords. Many currently homeless people worry that when filling out an application, their monthslong or yearlong stay at the shelter will be a black mark on their housing record.

The Section 8 Housing Choice Voucher waiting list is closed, and has been for quite some time. The Spokane Housing Authority’s website suggests checking back on the status in March. The process of obtaining a voucher can take a couple of years, according to Michelle Christie, a housing specialist with SNAP, which helps homeless individuals navigate their search for housing.

There are other income-based housing units available in Spokane to which an individual applies directly, but for the most part, those lists are also quite long and fluctuate between six months and two years, Christie said.

Over such a long wait time, it can be difficult for a person experiencing homelessness to track their application.

“If they’ve had a change in phone number or what have you, their name gets skipped off the top of that list,” Christie said.

Despite having a Section 8 voucher, Michelle King struggled to win approval to rent an apartment while temporarily sheltered by Family Promise. Her partner has to pay child support from a previous relationship, and her own credit rating is a nonstarter for landlords.

Their search was further complicated because King’s oldest daughter, 7, requires daily medication for seizures. A limited number of schools have full-time nurses capable of administering the medication, she found. King does not have a car and, given her daughter’s condition, wanted to live close to the school. After an arduous search, they landed at a place near Grant Elementary on the South Hill.

Her daughter’s condition is what led King to quit her old job, part of the reason she found herself homeless.

“That wasn’t a smart choice for me, but at the time I was so overwhelmed with all the stuff about my daughter that I just needed to be by her side. We don’t have alcohol or drug abuse problems. We have a really good family dynamic,” King said.

King’s 4-year-old son has been in the shelter system essentially his entire life, and still is learning how to adapt to life in a stable home after years of bouncing between shelters and churches for short stays.

“He keeps asking what church we’re going to now,” King said.

Kristin Juarez was working when she became homeless, but could no longer make ends meet. A new property manager was less flexible, cracking down on late rent payments, and it sparked a “downward spiral” that included temporary stays in motels and campsites at state parks.

When Juarez arrived at the Open Doors shelter, “I didn’t really know what I needed to be doing,” she said. Her long to-do list included meeting with a case manager on a weekly basis and obtaining a Section 8 voucher.

In fact, the life of a homeless person can be excruciatingly busy.

As a single mother of three children, Juarez still was putting herself through school and raising her children, but had the additional burdens of applying for assistance. She filled out logs to prove to Family Promise that she was actively looking for a home.

“It was a lot,” she said.

Juarez found five suitable apartments, but four of them were out of her price range. The one she lives in now was only within her budget because the landlord agreed to lower the advertised rent by $9 per month.

“I searched for six months before I was able to even find anything,” Juarez said.

When Juarez left Spokane, she was paying $650 for a two-bedroom apartment. Two years later, that same apartment is $815. The place she has now is $990 per month, she said.

In the fall of 2019, the average rent for an apartment in Spokane County was $1,019 per month, according to the University of Washington survey. That’s an increase of 57% from 2009, when the average rent here was $651.

Chris Keyser has been homeless since his house in Coeur d’Alene burned down in 2014. After several years on the street in Idaho, Keyser thought he’d have better luck in Spokane, but ended up at the House of Charity, where he is now a resident and employee. Keyser is one of many who believe the lack of affordable housing is the most significant barrier to the homeless.

“When I came over here I knew I’d be homeless for a little while. I expected that. But I didn’t expect it to turn into such a difficult thing to grab and get ahold of (housing),” Keyser said.

Michael Radvanyi has been homeless for about six weeks since losing his apartment, and has been staying at the city’s warming center on South Cannon Street. He’s optimistic because his Social Security payments just kicked in, but it’s been hard to locate a new place for less than $500 a month.

He’s hoping to get back into a place with his old landlord again.

“If this landlord doesn’t work out, I don’t know what I’m going to do,” Radvanyi said.

Transportation

While many people experiencing homelessness laud Spokane for the wide variety of social services it hosts – often a reason why they landed here – they say it’s a struggle to navigate the complex network of providers without easy access to transportation.

The Spokane Resource Center, for example, offers housing assistance, job training and other resources. But it’s 2 1/2 miles away from the city’s warming center on Cannon Street.

Todd, who is now housed but spent more than 20 years homeless in Spokane, said if she could build the system from the ground up she would centralize providers, not have them “at the corners of the earth.”

“Transportation is what holds people back. If you can’t get to appointments, you can’t get out of the rut,” Todd said.

She suggested a small, free bus that runs in a loop between social service providers on a regular schedule to allow people to plan for – and actually make – their appointments. Some providers refuse to continue services to people who fail to appear for an appointment.

“If this bus would pick people up and take them to these places on a regular schedule, then these programs that the politicians and the nonprofits put together would be accessible,” Todd said.

The city applied for and received a 12-passenger van from the Spokane Transit Authority for just that purpose, according to Community, Housing and Human Services Director Tim Sigler. The problem has been finding a way to pay for its operation, including the cost of a driver, gas and insurance. The department is exploring grant opportunities and looking for philanthropic help.

“If we could do that, our plan is to have several dropoff and pick-up sites that we know are going to be most utilized,” Sigler said. “It’s just a matter of finding the funding.”

The Spokane City Council authorized $30,000 for free bus passes to assist the homeless in 2019, and there are still bus passes for 2020. Of that, $5,000 of passes went to Community Court and $25,000 was distributed to homeless service providers. Additionally, each of the agencies that the city funds has its own budget for bus passes, Sigler said.

But those who are camping or are on the streets don’t have access to the bus passes and are struggling the most to get to appointments, he said.

It’s not easy to get a bus pass, and the justifications for getting one are often restricted by providers, according to several people experiencing homelessness.

When the bus isn’t available, the only option is to walk.

Keyser entered Catholic Charities in respite care due to severe blisters on his feet – not a position he thought he’d be in at 60 years old.

“I went to the hospital and they said, ‘Listen, you’ve got to get off your feet.’ They were waterlogged and everything. I had to get off my feet and dry them out,” Keyser said. “What was there to do but walk around and try to find resources? I would get so tired of it.”

Identification

Jose Chavez, a patron at the Cannon Street warming center, expects the entire process of finding an apartment to take about eight months. As with many other homeless people, the first major barrier to rehousing Chavez faces is obtaining a valid form of identification.

When you’re homeless it’s easy to lose your identification, or just as likely, it will be stolen, Chavez said. Formerly in the construction industry in Montana, Chavez was laid off, starting a “snowball effect.” En route to California, Chavez ran out of money and landed in Spokane.

Just getting to the licensing office was a small miracle, given Chavez’s lack of access to transportation. Once there, he learned he needed to list a permanent address. Unsheltered at the time, his efforts stalled. Now, Chavez has listed the Cannon Street facility as his address and is eagerly awaiting a new ID in the mail.

“After I get my license, then I have to try housing. Then you gotta wait two to three months just for that, for you to get accepted and all that stuff, and then you’ve got to start looking, and that takes a while,” Chavez said.

Food

Staying nourished can be a constant struggle for people experiencing homelessness. Crystal Julian receives Social Security, but her income quickly dissipated every month when she was homeless.

“A lot of my check was going out to eat, I couldn’t stomach the foods that were at the churches,” Julian said.

Woodward made addressing homelessness the central issue of her successful campaign for mayor in 2019, and her calls for a “tough love” approach resonated with her supporters. In addition to offering a “jail or treatment” approach, Woodward also criticized low-barrier shelters.

“We can no longer continue to warehouse people and hand out sandwiches,” Woodward said last year.

But some experiencing homelessness bristle at the assertion that handouts enable the homeless to continue living such a lifestyle.

“A peanut butter and jelly sandwich is still a peanut butter and jelly sandwich. It still provides a quick, nutritious meal,” Todd said. “Why are you giving it to your kids if it’s such a bad thing?”

When he was unsheltered, Keyser absolutely wanted a sandwich, and it didn’t deter his search for housing – it enabled it.

“I didn’t want to go out searching for resources hungry,” Keyser said. “Giving someone a sandwich or a bowl of soup, I think that’s a great idea. I don’t think it enables them.”

Shelter

Before moving to Washington last year, King couldn’t live with Justin, her partner of eight years, at the homeless shelter in Montana because they were not legally married at the time.

Homelessness can be especially straining on couples with or without children because shelters often are segregated by gender.

Check-in at the shelter Chavez stayed in was two hours before the shelter his ex-wife stayed in, he said.

“You’re inat 6 (p.m.) worrying about what your wife’s doing for two hours,” Chavez said. Homelessness “is already stressful for a relationship.”

Chavez is worried that Jewels Helping Hands’ temporary contract with the city to operate the shelter on Cannon Street will expire before he is able to find housing.

“When they take this place, it’s going to suck for all of us to go back in the trees and sleep with the roaches,” Chavez said.

Sigler said the city is continuing to collaborate with regional partners, including Spokane County and Spokane Valley, to secure the funding necessary to open a continuous-stay emergency shelter for single adults later this year.

“That’s going to be our biggest need,” Sigler said. “There is a plan, we just have to find that additional funding.”

Business

People experiencing homelessness are acutely aware of the contempt some businesses hold for them, in ways that manifest themselves as policies against bathroom use for nonpaying customers and the use of high-pitched sound machines to deter loitering.

Spokane can be judgmental, Talbert said.

“It’s kind of like ‘Bring your money, but don’t you stay,’ ” Talbert said.

Clifford Moore, who has been homeless on and off for two years and now works at Jewels Helping Hands, suggested that business owners pop their heads into the warming center and get to know the patrons personally.

“Unfortunately, a lot of these local business owners deal with the homeless problem. And that tends to put a spotlight on … the very few who are actually causing the problems,” Moore said. “Right now they see what a few people do and put us all in the same category.”

Moore, 47, suggested the city consider tax incentives for businesses that hire homeless people.

Another hangup for the homeless, Moore said, is the assumption that businesses won’t hire people with felony records. That’s not always the case, he said.

But Union Gospel Mission resident Christopher Hovdesven worried that, as he watches the news and sees companies bringing hundreds of jobs into Spokane, they aren’t open to a person like him.

“Are they going to be hiring people like us who are felons? What population are they really providing these jobs for?” Hovdesven asked. For some employers, “I don’t care if you come out with a master’s degree and you’ve been clean and sober and haven’t committed a crime in 20 years, they will not hire a felon.”

Perception/judgment

What also frustrates the homeless is how they are perceived by the housed.

Not all homeless people are addicts. Not all struggle with mental health issues. And, most of all, they aren’t lazy and want to work.

“There’s a lot of people that want to change and just don’t have that opportunity. A lot of these people are compassionate, they do care,” Kelly said.

Several people with experience being homeless highlighted the value of a smile, a wave, or a “Hi, how are you?”

“We want help, we need help, we just need people to treat us better,” said Kelly, who has gotten sober since coming to Jewels about four months ago. “Say ‘Hi,’ you know? If someone’s hungry, give him some food.”

People who haven’t had much contact with the homeless can be fearful, Talbert said.

“They don’t understand that we’re not out to go, ‘Oh, I want to kill her tonight,’ or ‘Look at the ring she’s wearing, I’ll cut her finger off,’ ” Talbert said.

Michael Burke said he has 18 months until he can collect his full Social Security. In the meantime, he wants to work.

“At my age. It’s hard to find work,” Burke said.

Burke worked at a local home improvement store, but because his employer wouldn’t offer him full-time hours, he lived in a tent for three years.

“You don’t let them know you’re homeless,” Burke said. “That’s a hard stigma to get away with.”

Services and treatment

After 13 months in jail, Vansant was supposed to be enrolled in a re-entry program. He never found it.

Vansant entered treatment with Frontier Behavioral Health for his mental health issues that stem from childhood, leading him to “crash and burn” despite a successful career and strong work ethic.

Vansant is stuck in a cycle – he can’t hold a job and make an income until he addresses his mental health. But he can’t find an apartment until he has an income. Thus, he is living at the men’s shelter at Union Gospel Mission.

“I finally came to the conclusion that what the problem is, I need to deal with it now. And now I can go out and be a productive person in society,” Vansant said.

Hovdesven was an EMT for about six years in Seattle, but has lived with anxiety and depression, as well as addiction. He’s been chronically homeless since 2006. He now lives at Union Gospel Mission and receives treatment at American Behavioral Health Systems.

A safe place is critical for the homeless, Hovdesven said, even if it’s only a day room.

“It’s really nice to have that cushion … and be inspired by people around you that want to lift you up,” Hovdesven said.

“As for what we need? We need places that will help with the mental health issues,” Burke said.

There are services in Spokane for emergency mental health crises operated by community organizations as well as in partnerships with law enforcement agencies. Access to services for non-emergent mental health care, however, remains a challenge for some.

Austin Luhn, 25, remembers having sex education in high school. But there was no drug and alcohol education. There was no mental health education, he said. Such classes would give people “an opportunity at a younger age to address mental health issues that they have,” Luhn suggested.

Luhn began abusing substances during his senior year of high school, and it wasn’t until he checked into Union Gospel Mission three months ago that he delved into his past.

“Had I had the ability in high school to have some sort of deeper counseling and education on what mental health actually is and on top of that, drugs and addiction, you know, I might not be here today,” Luhn said.

Sigler said the city’s next major investment in combating homelessness should be in behavioral health treatment. When someone is ready to get help, even a two-week wait can “completely derail” their recovery, he said.

“Would really like to see bigger investments in behavioral health, because we know that’s a huge, huge barrier,” Sigler said.

Many who experience homelessness see the need for more addiction treatment and behavioral health services.

Eastern Washington 211 markets itself as a one-stop directory for social services and resources. Call takers are available from 8 a.m. to 6 p.m., but the service responds to text messages 24/7. Still, some providers and individuals experiencing homelessness are skeptical that its information is up to date.

Talbert wishes there was a comprehensive list of all the resources available in the area. Without it, homeless people are left to run to one service provider to see what it offers, then to others to see what they offer. In between, transportation is a challenge. At one point, Talbert broke her foot, and “it was like, ‘Oh, my god.’ ”

“A lot of times, a program will pop up and you have to hear about it by word of mouth,” Talbert said.

Juarez benefited, in a way, from her experience with homelessness as a child, on and off for about three years while her mother navigated an abusive relationship with her father.

“A lot of people that I ran into when I was homeless just lacked education on the resources,” she said.

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Taking A Joint Home Loan Can Benefit You. Here’s Why – Forbes Advisor INDIA

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In India, buying a home is mostly the single largest investment made by an individual during their lifetime. As our families expand, we plan for the future and plan to invest in bigger homes that can comfortably accommodate and protect a growing family. However, such dream houses come at a significant cost, warrant access to huge funds, and hence, require key financial planning.

In most cases, individuals need to opt for home loans to fulfil the cost obligation associated with buying a house. Considering the amount and type of loan taken, there are certain eligibility criteria that one needs to be aware of before initiating applications. 

At the time of taking a home loan, your lender or you may wish to add another applicant, also called co-applicant, to your home loans for various reasons and the structure of having a co-applicant is referred to as a joint home loan. 

Let’s understand when and why should you take a joint home loan. 

Role of a Co-applicant in a Joint Home Loan

A lender while considering applications simply wants to check if the borrower can repay the home loan along with their household expenses and existing loans. Therefore, while calculating your eligibility they generally keep aside a certain fixed portion of your income that covers your existing expenses. An individual’s eligibility is decided on the basis of the discretionary amount left post calculating their interest repayments and monthly instalments. 

In a joint home loan, you can add another co-applicant or applicants who becomes liable to pay the home loan along with the primary applicant. Liability of the loan is a collective responsibility on both or all the co-applicants as well. Generally, immediate family members, including father, mother, spouse, children, and brother, are most eligible to become co-applicants in joint home loans. 

With such arrangements the question that mostly arises is whether the co-applicant is also the co-owner of the home being considered. Co-applicant or co-applicants may or may not be the co-owner of the property, however they have a liability to pay back the loan. The co-owner of the property is a joint owner along with other owners. 

As a safeguard and prudent underwriting practice, lenders ask all co-owners to also become co-applicants in home loans, however, the reverse need not be true. This is a decision the pros and cons of which should be carefully considered by the primary applicant while choosing joint home loans.

Why Choose a Joint Home Loan Over Any Other Loan 

There are a number of additional advantages in considering taking a joint home loan as compared to an individual home loan. These include higher loan amount eligibility, lower interest rates and other income tax benefits. 

Higher Loan Amount Eligibility: When you add an income-earning co-applicant to a loan, the lender considers the income level of all the applicants and calculates an eligibility amount higher than that of only one individual applying for a home loan. This allows applicants or families to take a larger home loan amount or purchase a more aspirational home since the room for increasing an applicant budget is possible. 

Lower Interest Rates: In order to avail lower interest rates individuals can add their spouses or mother as co-applicants for a joint home loan and as a joint property owner. This is useful as most lenders in India offer a lower rate of interest to women borrowers. It is up to 10 to 25 basis points lower than the interest rate for male borrowers. 

Tax Benefits: Tax benefits can be enjoyed by all the co-applicants separately. For this to happen, co-applicants should be property owners as well and should contribute to the payment of monthly instalments towards the repayment of the home loan. 

Income Tax benefits that are available to the all co-applicants include: 

  • Benefit under Section 80 C of the Income-Tax Act for the loan’s principal payment up to a maximum limit of INR 1.50 lakh per year. 
  • Benefits under Section 24 of the Income-Tax Act for interest paid on a home loan up to INR 2 lakh per year. 
  • In a joint home loan, both the applicants can claim the above amounts individually and use this as an effective tax planning tool

Co-applicants and first-time loan applicants can utilise the joint home loan as a great tool to improve their credit score, thereby easing the process for future loan applications as and when required for various other purposes. 

Necessary Documents Needed for a Joint Home Loan

Documentation is the most cumbersome and tiring part of taking any loan. However, it is a critical part of any lender’s operations as they would want to make sure that their borrower meets income eligibility and supporting documents are provided. 

There are a number of regulatory guidelines for the know your customer (KYC) and property-related documents, where it is imperative that all accurate documentation is shared to avoid unnecessary rejections and thereby delaying the availability of funds. 

For any home loan, typically an applicant needs to provide the following: –

  • KYC documents which include:
    • Identity Proof
    • Address Proof 
  • Income proof documents including but not limited to:
    • Salary slips, Form 16 issued by your employer or
    • Income tax returns (especially for self-employed) of the last three years
  • Property related documents such as: 
    • Agreement to sell, a sale deed or a registry 
    • Previous sale deed for the property (typically all transactions done on that property in the last 13 years) 
    • Few property or location-specific documents like a no-objection certificate (NOC) from relevant authorities or from your bank if the project is funded by any financer in case you are buying new property from a builder.

All applicants need to provide their KYC documents regardless of whether they earn an income or not or whether they even co-own the property. 

If you are applying for a joint home loan mainly for higher eligibility wherein the income of other applicants also needs to be considered, then income documents of all the applicants will be required to be shared with the lender in addition to KYC documents.  

If your purpose is to save on stamp duty charges by adding a female member of the house as a co-owner of the property, then you must make sure that the draft agreements and final sale deed or the registry documents have relevant members stated clearly as co-owners. 

If you are a nonresident Indian (NRI), you can issue a registered power of attorney (POA) in favour of a trusted family member for them to execute the necessary documentation on your behalf. However, you must ensure that the exact purpose of the required transactions are mentioned in the POA, thereby easing the process for compliance and reducing chances of rejection.

Factors to Consider Before Applying for a Loan

Before even applying for a joint loan, it is important to fully understand the lenders’ conditions, which differ depending on the provider you’re considering to approach. 

Lending Conditions

  • If the property has co-owners, in such a case, the lender, in all likelihood, insists all co-owners to become co-applicants as well. 
  • The lender may also insist any or one of your family members become co-applicants in the case of an NRI loan. 
  • If you have given the power of attorney to any of your family members, the lender is likely to insist one of the family members is available in the country as co-applicant for follow-ups and communication purposes to minimize repayment risks.

Credit Score Reports

It is always better to check your and the other co-applicant’s credit score and bureau report prior to applying. This will help to ensure that you are aware of all your past and current loans along with their performance over time. 

In some cases, if it is observed that you may have an old credit card with some minor payment overdue or incorrect reporting by any financial institution, it may lead to the possibility of hampering your overall credit score, reducing the chances of approval.

In India, there are primarily four credit bureaus via which you can check your credit report. Any bureau after paying relevant fees, which is about INR 500, will process your credit report. These credit bureaus include CIBIL, Equifax, CRIF Highmark and Experian.  

When to Avoid Taking a Joint Home Loan?

When a co-applicant already has significant loan obligations and is not left with sufficient income to be eligible for a higher home loan amount, it is generally advisable to reconsider taking a joint home loan and instead consider an individual home loan.

Healthy credit history is very important for lenders while considering applications and a co-applicant who has a bad credit history or poor track of repaying past loans is a major factor while assessing the eligibility of a new loan. 

If your income is sufficient to cover costs with no additional benefits available in terms of tax write-offs, it is suitable for you to avoid a joint home loan and keep the responsibility of your liability limited.

Joint home loans are also best avoided if there is a plan for taking on a larger liability or loan in the near future as the joint loan may impact the eligibility criteria of future loans due to existing liabilities.

Bottom Line

A joint home loan is a beneficial financial tool with the potential of helping the borrower secure higher loan amounts. 

It can aid individuals significantly improve their spending power and investing threshold while buying a larger and more comfortable home and at the same time keeping the primary applicant’s liabilities manageable by sharing the repayment burden with other co-applicants. 

If utilized correctly, it can help you enjoy higher tax benefits, while simultaneously reducing overall tax outgo on a yearly-basis. 

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Fixed-rate student loan refinancing rates inch up, but still hover near record low

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Our goal here at Credible Operations, Inc., NMLS Number 1681276, referred to as “Credible” below, is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders who compensate us for our services, all opinions are our own.

The latest trends in interest rates for student loan refinancing from the Credible marketplace, updated weekly.  (iStock)

Rates for well-qualified borrowers using the Credible marketplace to refinance student loans into 10-year fixed-rate loans hit another low during the week of April 12, 2021.

For borrowers with credit scores of 720 or higher who used the Credible marketplace to select a lender, during the week of April 12:

  • Rates on 10-year fixed-rate loans averaged 3.78%, up from 3.73% the week before and down from 4.81% a year ago. The record low for 10-year fixed rate loans was 3.71%, during the week of Feb. 15, 2021.
  • Rates on 5-year variable-rate loans averaged 3.26%, up slightly from 3.13% the week before and down from 3.28% a year ago. Variable-rate loans recorded a record low of 2.63% during the week of June 29, 2020.

Student loan refinancing weekly rate trends

If you’re curious about what kind of student loan refinance rates you may qualify for, you can use an online tool like Credible to compare options from different private lenders. Checking your rates won’t affect your credit score.

Current student loan refinancing rates by FICO score

To provide relief from the economic impacts of the COVID-19 pandemic, interest and payments on federal student loans have been suspended through at least Sept. 30, 2021. As long as that relief is in place, there’s little incentive to refinance federal student loans. But many borrowers with private student loans are taking advantage of the low interest rate environment to refinance their education debt at lower rates.

If you qualify to refinance your student loans, the interest rate you may be offered can depend on factors like your FICO score, the type of loan you’re seeking (fixed or variable rate), and the loan repayment term. 

The chart above shows that good credit can help you get a lower rate, and that rates tend to be higher on loans with fixed interest rates and longer repayment terms. Because each lender has its own method of evaluating borrowers, it’s a good idea to request rates from multiple lenders so you can compare your options. A student loan refinancing calculator can help you estimate how much you might save. 

If you want to refinance with bad credit, you may need to apply with a cosigner. Or, you can work on improving your credit before applying. Many lenders will allow children to refinance parent PLUS loans in their own name after graduation.

You can use Credible to compare rates from multiple private lenders at once without affecting your credit score.

How rates for student loan refinancing are determined

The rates private lenders charge to refinance student loans depend in part on the economy and interest rate environment, but also the loan term, the type of loan (fixed- or variable-rate), the borrower’s credit worthiness, and the lender’s operating costs and profit margin. 

About Credible

Credible is a multi-lender marketplace that empowers consumers to discover financial products that are the best fit for their unique circumstances. Credible’s integrations with leading lenders and credit bureaus allow consumers to quickly compare accurate, personalized loan options ― without putting their personal information at risk or affecting their credit score. The Credible marketplace provides an unrivaled customer experience, as reflected by over 4,300 positive Trustpilot reviews and a TrustScore of 4.7/5.

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What is a Credit Builder Loan and Where Do I Get One?

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Your credit score plays an important role in your financial life. If you have good credit you can qualify for loans and borrow money at lower interest rates. If you don’t have a credit score or have poor credit, it can be hard to get loans and you’ll be forced to pay higher rates when you do qualify.

Building credit can be like a chicken and egg problem. If you have no credit or bad credit, you’ll have trouble getting a loan. At the same time, you need to get a loan so you have an opportunity to build credit.

 

What Is a Credit Builder Loan?

A credit builder loan is a special type of loan designed to help people who have poor or no credit improve their credit score.

In many ways, credit builder loans are less like loans and more like forced savings plans. When you get a credit builder loan, the lender places the money in a bank account that you can’t access. You then start receiving a monthly bill for the loan. As you make those payments, the lender reports that information to the credit bureaus, helping you build up a payment history. This improves your credit score.

Once you finish the payment plan, the lender will release the bank account to you and stop sending bills.

In the end, you’ll wind up with slightly less money than you paid overall, due to fees and interest charges. For example, let’s say you get a credit builder loan for $1,000, the lender may make you make a monthly payment of $90 each month for a year. After the year ends, you’ll get the $1,000 from the lender, but may pay $1,080 overall.

Why Get a Credit Builder Loan?

The main reason to get a credit builder loan is right in the name: They help you build your credit. If you don’t have any credit history or if you’ve damaged your credit by missing payments, it’s much easier to qualify for a credit builder loan than a traditional loan from a lender.

The companies offering credit builder loans take on almost no risk because they don’t give you the money until you’ve finished paying the loan, so they’re willing to approve people who have severely damaged credit.

Credit builder loans will help you build your credit history if you make your monthly payments, but you do have to pay fees and interest to do so. There are other ways to build credit that don’t require paying any money. For example, if you get a fee-free credit card and pay your balance in full each month, you’ll build credit without paying any interest or fees.

This makes credit builder loans best for people who have tried and failed to qualify for other loans and credit cards.

There is also some value in the forced savings provided by credit builder loans, but the interest and fees eat away at that savings. If saving is your goal, it’s best to use a different strategy to help you save, but if you want to save and build credit at the same time, a credit builder loan might be worth using.

Where to Find Credit Builder Loans?

There are many companies that offer credit builder loans. Each lender offers different loan terms, fees, and interest rates.

One of the top credit builder loan providers is Self. The company offers credit builder loans with payment plans as low as $25 per month, making it easy for almost anyone to afford a credit builder loan.

With Self, you can also qualify for a Visa credit card after you’ve made at least 3 payments on your credit builder loan and made $100 of progress toward paying off the loan. You can set your own credit limit, up toward the total amount of progress you’ve made on the loan.

The card doesn’t have any additional upfront costs and can help you gain experience with using a credit card. It can also help you build your credit by giving you another account to make payments on, providing you with more opportunities to build a good payment history.

Visit Self or read the full Self Review

What to Look for?

When you’re looking for credit builder loans, there are a few factors to consider.

The first thing to think about is the monthly payment. The point of a credit builder loan is to show the credit bureaus that you can make regular payments on your debts, which will help build your credit score. If a lender’s minimum payment is more than you can afford each month, you won’t be able to build your credit with that lender’s credit builder loan.

It’s also important to think about the cost of the loan. Credit builder loans often come with stiff fees and you also have to pay interest on the money you’ve borrowed, even if you don’t get access to it until you pay the loan off.

The fewer fees and the less interest you have to pay, the better. You should look very carefully at each lender’s fee structure to choose the best deal.

Finally, take some time to see how easy it is to qualify. While credit builder loans are targeted at people with bad credit, some lenders will still check your credit history and might deny your application.

If you have very bad credit, you might want to look for a lender that advertises credit builder loans with no credit check.

Alternatives to a Credit Builder Loan

Credit builder loans can be a good way to build credit for some people, but they come with interest charges and fees. There are other ways you can build credit worth considering. Some of them won’t cost any money, which may make them a better choice than a credit builder loan.

Secured Credit Cards

A secured credit card is a special type of credit card that is much easier to qualify for than a typical card.

With a secured card, you have to provide a security deposit when you open the account. The credit limit of your card will usually be equal to the deposit you provide. For example, if you want a $200 credit limit, you’ll have to give the card issuer $200 as collateral.

Because you give the lender cash to secure the card, it’s much easier to qualify for a secured credit card. The lender assumes almost no risk. Once you get the card, it works like any other credit card. You can use it to spend up to your credit limit and you’ll get a bill each month. If you pay the bill on time, you can build credit.

Many secured cards charge high interest rates and have hefty fees, but there are some fee-free options available. One great secured card is the Discover it Secured Credit Card, which has no annual fee and offers cash back rewards.

Become an Authorized User

Most credit card issuers let cardholders add other people as authorized users on their accounts. Authorized users get their own cards and can use them to spend money just like the main cardholder.

Some issuers will report account information to the credit reports of both the main cardholder and any authorized users. If you know someone that is willing to make you an authorized user on their credit card account, this may help you build your credit so you can qualify for a card of your own.

Not every issuer will report information to authorized users’ credit reports. It’s also worth keeping in mind that if you become an authorized user on a card and the cardholder stops making payments or racks up a huge balance, that will show up on your report as well, damaging your credit further. That can make this strategy risky.

Personal Loans with a Cosigner

Personal loans are highly flexible loans that you can use for almost any reason. If you need to borrow money, you can try to find someone who is willing to cosign on the loan. Having a cosigner can make it easier to qualify, even if you have poor credit, giving you a chance to build your credit score.

When someone cosigns on a loan, they’re promising to take responsibility for your debt if you stop making payments. Lenders will look at both your credit and your cosigner’s credit when you apply, so having a cosigner with strong credit can help you get the loan or reduce the interest rate of the loan.

Keep in mind that your cosigner is putting themselves at risk by cosigning on a loan. It’s even more important that you make your payments every month. If you don’t, your cosigner will have to pick up the slack.

Personal Loans without a Cosigner

Even if you have poor credit, you may be able to qualify for a personal loan designed for people that don’t have strong credit. Just keep in mind that you’ll have to pay higher fees and interest rates to compensate for your poor credit score.

If you’re looking for a personal loan and have poor credit, shopping around for the best deal becomes even more important. You can use a loan comparison site, like Fiona, to get quotes from multiple lenders so you can find the cheapest loan.

Related: Best Emergency Loans for Bad Credit

What Is the Difference Between a Credit-Builder Loan and a Personal Loan?

A personal loan is a type of loan that you can get for almost any reason, such as consolidating debts, starting a home improvement project, paying an unexpected bill, or even going on vacation. They’re offered by many lenders and banks.

A credit builder loan is less a loan and more a forced saving plan. When you get a credit builder loan, the lender doesn’t actually give you any money. Instead, it places the amount you’re borrowing in an account you can’t access. Once you finish paying the loan, the lender releases the money in that account to you.

Credit builder loans tend to be much easier to qualify for than personal loans because the lender doesn’t have to take on much risk. They’re mostly used by people who want to build or rebuild their credit score.

On the other hand, personal loans are less popular for building credit and more useful for providing funding when borrowers need cash to cover an expense.

Related: Best Prepaid Credit Cards That Build Credit

Pros and Cons of a Credit Builder Loan

Before applying for a credit builder loan, consider these pros and cons.

Pros

  • Easy to qualify for
  • Helps you build savings
  • Payments are usually small
  • Helps you build payment history

Cons

  • Not really a loan
  • Fees and interest rates can be high
  • There are cheaper alternatives to build credit

FAQs

These are some of the most frequently asked questions about credit builder loans.

Like most loans, it is possible to repay a credit builder loan ahead of schedule, but there are a few downsides to consider. One is that many lenders add an early repayment fee to their loans, so you’ll have to pay that fee if you want to get out of the credit builder loan. The other is that repaying the loan early somewhat defeats the purpose. Each monthly payment you make toward the loan helps you build your credit. If you pay the loan off early, you’ll make fewer monthly payments, which means less improvement in your credit.

Missing a payment on a credit builder loan is like missing a payment on any loan. You’ll likely owe a late fee and it will damage your credit. This is one of the reasons it’s important to make sure you can afford the monthly payment before signing up for a credit builder loan. If you can’t make your payments, the loan will wind up damaging your credit instead of helping it.

Final Thoughts

Credit builder loans can be a good way to build or rebuild your credit, but they’re not your only option. They often involve paying fees and interest, so you should search around for the best deal or look for cheaper (or free) alternatives, such as secured credit cards.



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