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HELOC for Student Loans or Not

Started by dgab85, June 18, 2020, 01:24:33 pm

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dgab85

I currently own a townhome with a balance of $70k and it is worth about $150k. My monthly payments are about $430 a month at 4.5% interest. My student loans are about 84k at 5.5% interest. I am considering refinancing my home which will bring me to a 3.75% interest and taking out a HELOC of about $40k. I would like to know your thoughts if I should take out a HELOC to pay off 40k of my student loans?  I have been aggressively paying my student loans should be done in 3 years.

TheCollegeInvestor

Not really a fan of doing it. You're shifting the risk from yourself (which, yes, sucks, but there are a lot of programs and options), to your home (with no options except to lose your home).

You didn't say what type of loans you have - which definitely shifts the decision. Federal loans is likely a hard no. You give up income-driven repayment, loan forgiveness plans, and hardship options - like right now during Covid-19 Federal loans are paused with 0% interest. That's amazing.

Also, what if (in the unlikely situation) they do pass loan forgiveness - even partial. They aren't going to offer that on your HELOC. Only for Federal loans.

Private loans are a maybe, but you have to ask yourself if the risk is worth it.

alexsunny123

September 26, 2021, 06:02:55 am #2 Last Edit: July 14, 2022, 02:18:59 am by alexsunny123
Quote from: TheCollegeInvestor on June 18, 2020, 05:14:29 pmNot really a fan of doing it. You're shifting the risk from yourself (which, yes, sucks, but there are a lot of programs and options), to your home (with no options except to lose your home).

You didn't say what type of loans you have - which definitely shifts the decision. Federal loans is likely a hard no. You give up income-driven repayment, loan forgiveness plans, and hardship options - like right now during Covid-19 Federal loans are paused with 0% interest. That's amazing. https://ometv.onl https://chatroulette.top https://omegle.wtf https://bazoocam.cam

Also, what if (in the unlikely situation) they do pass loan forgiveness - even partial. They aren't going to offer that on your HELOC. Only for Federal loans.

Private loans are a maybe, but you have to ask yourself if the risk is worth it.


thanks for the awesome information.

MtnMusicMama75

no.no no no... student loans are the lowest risk out there.. and can be forgiven in IDR payment plans (for 240 qualifying payments and other qualifiers). DO NOT put your house/equity at risk to pay this off. =)