Mortgage Refinancing for Education
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Using mortgage refinancing for education
What Is Mortgage Refinancing for education and who is it for?
Education is very important and mortgage refinancing can help you pay for it. Here is how: Mortgage refinancing, by simple definition, is for people who already have an existing mortgage and are thinking of getting a new mortgage to replace the existing one. Your property will be the same but you’ll get a new (and maybe better) term. Plus, it’s very easy to refinance, especially when you have a great credit history. There are two types: rate/term refinance and cash-out refinance.
(for lower interest rates and adjustable length of mortgage)
You can use this if you want to save money. When you get lower interest rates, you will pay lesser interest amount every month.
EXAMPLE: If you are paying an interest rate of 5% in your current mortgage, you can get a 3% interest rate in your new mortgage when you refinance. This is due to the ever-changing rates in the market.
Another benefit of rate/term refinancing is that you can increase or decrease the length of your mortgage.
Decreasing the length of your mortgage will result to decreased total interest cost and you will be able to finish paying your loan sooner. However, it will increase the amount you are paying for the principal each month.
You can increase the length of the mortgage that will result to a reduced amount which you will have to pay every month. The trade-off for this is that you will pay for much longer and the total cost will increase.
(lets you pay other bills with a steady interest rate)
When you refinance a mortgage, there is another option in which you will be able to get a larger loan than the existing one. This is called cash-out refinance. With this, you will have to consider the equity of your home and it’s a very decent option if you’re looking for mortgage refinancing for education.
Equity is the value of your property minus the amount that you still have to pay on your mortgage. If you have a large equity, you will get more cash.
EXAMPLE: The value of your property is $500,000 and you still have to pay $250,000 on your loan, you have an equity of $250,000. A large amount from your equity can be taken out and be added to your new mortgage. It’s a part of mortgage refinancing for education.
The risk, however, is that your home is at stake and you can lose it if you miss some payments. But if you have a steady income and you can follow all the terms very well, then you don’t really have to worry about anything.
The best thing about cash-out refinance is that not only will you be able to pay your existing loan, you will also have the chance to pay for education. You won’t have to worry where to get money for tuition fees, books, and other school stuff.
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