Forbes Feature – 3 Ways to Use Home Equity to Pay for College
As costs for college tuition continue to rise and mortgage rates remain at historic lows, borrowing from home equity is now a practical and popular solution for many families. Jeff Miksta, of V.I.P. Mortgage in Scottsdale, AZ, was recently interviewed in Forbes magazine and provides three ways parents can access their home equity to help pay for their childrens’ college expenses:
- A Home Equity Line of Credit (HELOC) – This line of credit is extended to the homeowner using the property as collateral. Interest is charged on the loan balance, which is variable and tied to the current prime rate index (currently Prime is at 3.5%) plus a margin set by the lender. A HELOC is often used as a short term solution as they typically have a 10 year draw period and an additional 10 years to repay.
- A Home Equity Loan – Is a closed end or fixed rate 2nd Monthly payments generally include principal and interest payments. Rates tend to be higher than that of a conventional first mortgage, and terms vary. Most often you will see 10, 15 or 20 year loan terms.
- A Mortgage Refinance – There are two types of options to refinance your home – A Rate/Term Refinance or a Cash-Out Refinance. By extending the loan term and lowering the interest rate, in a rate/term refi, you can increase cash flow on a monthly basis to help save for the future. A cash-out refinance provides access to home equity in a lump sum.
Media Contact: Jeff Miksta, 480-336-2994 NMLS#1366595