It goes without saying that a lot of the unpredictability in today’s employment market can be attributed to these tough times. As a result, many Americans are suffering with the economic pinch that has resulted, especially those with student loan debt. While many of these individuals felt some temporary relief with the CARES Act, many of them are wondering how they will be able to start making payments again once that relief period has ended.
How to Refinance Your Home?
For some homeowners with this type of debt, a refinance loan may enable them to pay off all or most of that debt. But, is this really a smart idea? Let’s look at the advantages of paying off student loan debt with a refinance loan. By refinancing your home to pay off student loan debt, you’re can consolidate everything into a single monthly payment. Furthermore, mortgage loans are offering some of the lowest interest rates in years right now which would enable you to pay a lower rate on that student loan debt as well.
Conversely, there are some significant dangers involved when using the equity in your home. Keep in mind that your home is the collateral on your mortgage loan. If you’re unable to make those monthly mortgage payments, you could lose your home. On the other hand, being unable to pay off your student loans damages your credit, but you won’t lose any of your assets. If these are federal student loans, you could lose the benefits that help to reduce your indebtedness such as:
- income-based repayment plans
- loan deferent plans
- public service loan forgiveness
Terms of the loan
Additionally, refinancing your mortgage is going to increase the term or length of time you’ll be making those monthly payments and increase the amount of interest you’ll be paying as well. Furthermore, there are always fees included in refinance loans that make paying off student loan debt less cost-effective. If you don’t want to jeopardize your home, you can always consider refinancing that student loan debt in order to get better terms on it.
With interest rates at near historic lows, you could use the equity in your home to pay off your student loans. This would not only save you money in the long run, it would enable you to streamline your finances in the process. Just make sure that all of the numbers add up before moving forward.
We would like to help you get your finance in order. If you have questions, we have experts here to provide you with the right answers. For more information, contact Liberty Capital Services at (614) 505-0620 or visit our website at your earliest convenience.