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Question regarding equity and student loans
Posted on 10/21/18 at 9:45 pm
Posted on 10/21/18 at 9:45 pm
Wife has student loans worth about $35k at 6%. My home has about $90k worth of equity. My current rate is 4.75% and My latest credit statement when I purchased my vehicle stated I was in the excellent range for credit.
What would be the best route to pull money out to pay off her student loans to get rid of this student loan payment that I hate seeing every month? We plan to be in our house for at least 10-15 years so I will be able to pay it back down and feel I can save a little a month my doing this.
I currently am paying PMI because I purchased as a short sale and did a lot of renovations to increase the value. I have been lazy in getting this handled but feel I need myself in gear as I am wasting money.
What would be the best route to pull money out to pay off her student loans to get rid of this student loan payment that I hate seeing every month? We plan to be in our house for at least 10-15 years so I will be able to pay it back down and feel I can save a little a month my doing this.
I currently am paying PMI because I purchased as a short sale and did a lot of renovations to increase the value. I have been lazy in getting this handled but feel I need myself in gear as I am wasting money.
7
Posted on 10/21/18 at 10:25 pm to Phil
can you discharge home equity loans in bankruptcy?
hell, aren't all home loans protected by bankruptcy?
i can't imagine that after all the fees you come out that ahead on the rate difference, but being able to discharge it may make it worth it (from a purely amateur POV)
so you're OK with paying a home equity loan payment every month instead?
hell, aren't all home loans protected by bankruptcy?
i can't imagine that after all the fees you come out that ahead on the rate difference, but being able to discharge it may make it worth it (from a purely amateur POV)
quote:
ull money out to pay off her student loans to get rid of this student loan payment that I hate seeing every month?
so you're OK with paying a home equity loan payment every month instead?
Posted on 10/21/18 at 10:48 pm to Phil
Are her loans private or federal?
Posted on 10/22/18 at 2:51 am to Phil
This is a very bad idea IMHO
As others have said the fees will eat up any savings not to even mention the student loans payments are means tested unlike the mortgage, if some future event happens the loan payments can be adjusted to current income, a mortgage not so much so.
As others have said the fees will eat up any savings not to even mention the student loans payments are means tested unlike the mortgage, if some future event happens the loan payments can be adjusted to current income, a mortgage not so much so.
Posted on 10/22/18 at 8:55 am to Phil
quote:
What would be the best route to pull money out to pay off her student loans to get rid of this student loan payment that I hate seeing every month?
In financial decision making, math > "what you hate seeing"
This post was edited on 10/22/18 at 8:56 am
Posted on 10/22/18 at 9:18 am to Joshjrn
Private loans
Posted on 10/22/18 at 9:19 am to DallasTiger45
So it sounds like I should save the equity in my house and just pay as hard as I can to get them paid off.
Posted on 10/22/18 at 9:20 am to Phil
quote:
We plan to be in our house for at least 10-15 years so I will be able to pay it back down and feel I can save a little a month my doing this.
quote:
I currently am paying PMI because I purchased as a short sale and did a lot of renovations to increase the value.
Get the PMI taken off - by any means necessary - then just pay extra on the SL. The answer to debt is pay it off, not shift around deck chairs on the Titanic.
If you're that worried about the SL - get a laser-like focus on it and get rid of it. Problem solved.
But, seriously, if you have the equity headspace, getting the PMI off is a better use of your time and effort than incurring even more debt.
Posted on 10/22/18 at 9:41 am to Phil
PMI comes off when you have more than 20% equity in your house, so it doesn't matter if you have $90k in equity if your home is worth $500k.
A refinance is going to cost you over $2000. So keep that in mind. Removing PMI is usually free, its possible you have to pay for an appraisal which is ~$500. That's part of that $2000+ in a refinance too.
If your student loans are private then it may not be the worst idea to roll them into your home equity. I'm not a CPA but I believe a lot of the benefits to Primary home mortgage interest were removed recently?
Mortgage interest rates have been rising so if you have a rate under 4% you are likely better off NOT refinancing.
Lastly, you may look into removing your PMI AND getting a HELOC to pay off your student loans. You can often get HELOCs for basically free and with 6-18 months of no interest. Then they are usually Prime +1. So you are looking at 5.5-6% after the no interest time period.
I'm not sure I'd recommend that but just throwing it out there as an option.
A refinance is going to cost you over $2000. So keep that in mind. Removing PMI is usually free, its possible you have to pay for an appraisal which is ~$500. That's part of that $2000+ in a refinance too.
If your student loans are private then it may not be the worst idea to roll them into your home equity. I'm not a CPA but I believe a lot of the benefits to Primary home mortgage interest were removed recently?
Mortgage interest rates have been rising so if you have a rate under 4% you are likely better off NOT refinancing.
Lastly, you may look into removing your PMI AND getting a HELOC to pay off your student loans. You can often get HELOCs for basically free and with 6-18 months of no interest. Then they are usually Prime +1. So you are looking at 5.5-6% after the no interest time period.
I'm not sure I'd recommend that but just throwing it out there as an option.
Posted on 10/22/18 at 10:41 am to Phil
Go look up Dave Ramsey.
Posted on 10/22/18 at 5:15 pm to Phil
Something to consider: If you come on hard times you can sell your house and get $90K. You cannot sell your degree. That student loan will follow you through bankruptcy.
Posted on 10/23/18 at 12:43 am to Ace Midnight
quote:
The answer to debt is pay it off, not shift around deck chairs on the Titanic.
I am amazed by the constant belief you can borrow your way out of debt, it boggles the mind.
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