Home Refinance for College

Balancing family life with all the financial responsibilities is a great task for the heads of each family. As the kids grow, they deserve more privileges that add up to the current expenses the breadwinner pays for the family. When the time finally comes for the kids to go to college, the monthly mortgage and other significant costs add up and become one big ball of responsibilities. Hear this good news! You have a secret weapon lying right in your lot. You can battle the emerging middle-class struggle to pay for college tuition by using the equity of your house.

If you are a parent and a homeowner who wants to avail the advantages of your equity as cash to pay for your kid’s college tuition fees, the mortgage financing universe has two options for you. One is the cash-out refinance, and the other one is the Home Equity Line of Credit or HELOC.

What is cash-out refinance?

A cash-out refinance lets the homeowners replace the existing mortgage with a new and larger mortgage. The borrower or the homeowner takes the difference in cash. The advantage of paying tuition fees with the cash from refinance is that the difference in your monthly payment may be more manageable than student loan debt. It may also be tax deductible which gives the borrower more advantage.

What is HELOC?

The second mortgage line of credit is called HELOC. The payment for this loan can only cover interest only for the first ten years. The borrowers will only pay the interest on the amount that they use. HELOC payments can also be tax deductible.

Using home refinance for college is a decision that requires lots of research and rational thinking. It may be an instant solution for the demanding financial needs, but it should fit into the overall long-term financial goals of the family. If you’re still not sure if you’re ready to enter the world of refinancing, you can talk to a financial planner and get a good deal of advice.