Sep
25
25
wrtrchk asked:
Has anyone ever paid off their college loans using the equity in their homes? I’ve been told that it’s the best and fastest way to eliminate debt but I’d rather hear what others have to say.
Related Blogs
- Related Blogs on College Loans
- Student Loan Repayment Options
- College Loan Money Gets Tight
Tags: College Loans, Home Equity
September 28th, 2008 at 1:52 pm
DO NOT DO NOT DO NOT
If you pull any equity from your home (in this market) please put it back into your house
student loans are generally at a low interest rate - you’d be better off doubling your monthly pay back amount
October 1st, 2008 at 7:41 pm
Before the bust in real estate, many banks would have been glad to do this. Now, it is difficult to find a willing bank. The situation will improve in a year, I hope, and then you might be able to do this. Call your favorite bank and talk to their residential loan officer.
October 3rd, 2008 at 5:27 am
Do not apply for a home equity loan to pay off your college loans. Besides the extra thousands of dollars that you’re paying for interest, it’ll take you longer to pay off the debt. Most likely, you got your loans from the college you’ve attended. Colleges offers the best interest rates for loans. Home equity loans are usually paid off in 30 years and college loans are paid off in 10 years. You’ll be saving 20 years worth of interest. If you can afford to pay more the minimum each month, pay more.
October 5th, 2008 at 8:34 pm
In my opinion, you’re probably better off NOT doing this move. For one, housing values continue to decline in many areas (not sure if yours is one). Also, the interest you pay on your student loans is generally tax deductible, and your interest rate is probably about the same that you could expect on a home equity loan.
Moreover, do you know if your bank’s home equity program charges fees for closing?
If you are looking to lower monthly payments, then try talking to your student loan lender. Generally, they are agreeable to extending your loan term - modifying your loan - for no additional cost. This would lower your monthly payment but would mean paying more interest over the life of the loan (assuming you don’t pay it off early).
Otherwise, the plan you present is to borrow from Peter to pay back Paul. You will still have to pay Peter.
Add A Comment