Need College Expenses? - Try Refinancing Your Mortgage
Topics: refinance, mortgage, loans, home, equity, cash, out, rate, interest, time, type, saving, refinancing
Having someone in your home that is going to college certainly does put an extra pinch on the finances. This could make it difficult for the student as well as the parents. If you have lived in your home for a while, though, by refinancing your mortgage you could get access to your equity. This would give you a low cost loan that could pay your student’s way through his or her college years - and it may even allow you to reduce your monthly payment, too.
Calculate Your Equity
The equity in your home, which builds up each year you are there, could provide you with all the money you need for college expenses - and more. Depending on how long you have lived there, you may have enough to pay more than one bill for school. You can calculate your equity quickly if you know what your home is worth now, and what you have left to pay on your mortgage. Just subtract the amount you owe from the worth of the home, and then multiply by .8. This figure will actually show you 80% of your equity. If you take out more than this, you will need to pay for private mortgage insurance.
Figure Out How Much You Need
While you are thinking about getting hold of the cash you need for college expenses, you may as well think about other projects you might need cash for, too. Anything goes, whether it is a renovation on your home, a long vacation or trip, debt consolidation - now would be the time to get it.
The lender, however, will recalculate any amount of equity that you get. The loan officer will also take a long look at your finances and credit history, too, in order to determine the actual amount you can receive.
Get A New Interest Rate
If you watch the mortgage interest rates on the market, you will be able to know the best time to apply for your mortgage refinance. If the market should permit it, you could reduce your monthly payment, a well as the total amount you owe for the mortgage.
There are many different types of mortgages you could apply for, but if you have an adjustable rate mortgage, it may be a good time to get into something that is more economically stable. A fixed rate mortgage would provide you with level payments that continue throughout the loan term.
Save More By Reducing The Time
Instead of refinancing your mortgage for another 30 years or so, reduce it as much as you can - possibly to 15 or 20 years. This will result in many tens of thousands of dollars saved - and allow you to get out of debt quicker, too - if you continue to live in that house.
Shop Around For Best Results
When it comes time for you to refinance your mortgage, you will want to shop around for the best deal. Lenders vary quite a bit in fees, interest rates and terms that they offer, so looking around becomes imperative. Too many people could have had better deals if they only paid a little closer attention to what they were getting.
Joe Kenny writes for the UK personal finance site www.ukpersonalloanstore.co.uk and also for US residents, www.rebuild.org
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