BUT…. as a homeowner, you have a secret weapon to defend against the struggle to pay for college tuition by utilizing the equity in your home. Mortgage financing offers two alternatives that allow homeowners with equity in their homes, to take cash out and pay their child’s tuition bill. One option is the cash-out refinance, the other is the Home Equity Line of Credit or ‘HELOC’.
A ‘cash-out refinance’ replaces your existing mortgage with a new larger mortgage, and you (the borrower) take the difference in cash. Depending on the amount of cash you need and the rate of interest, the difference in your monthly payment may be far more manageable than student loan (OSAP) debt.
A ‘home equity line of credit’ [HELOC] is a second mortgage line of credit that you can draw on as you need it, and typically you only pay interest on the amount you actually use.
Using the equity in your home to finance college tuition costs is a decision that requires lots of information and careful consideration and comparison of the mortgage options available. It may be a great solution in the immediate but needs to fit into your overall financial profile and long-term financial goals.
If you’re considering whether or not this is a suitable option for you, please feel free to schedule an appointment to speak with me, I’d love to help! You can do so by clicking here.
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