Student loan vs. home equity loan

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Marmot
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Student loan vs. home equity loan

Post by Marmot » Fri Nov 15, 2019 4:20 pm

I have a friend with a 47K 7% student loan. She was thinking of getting a home equity loan in the 3 - 4% range and using the proceeds to pay off the student loan. She is a very good credit risk. Obviously getting a lower interest rate is a winner. She has 100K equityin a 240K house. What are some other options she should explore? I came up with:
1) See about refinancing it into your existing home loan (30year, 4.25%)
2) Research a whole new home loan to roll the student loan into. (3.75 % I think is realistic? Not up on rates and deals these days)
3) Use the home loan option

Since it is a student loan she "owns it", meaning someday it needs to be paid off regardless. My thinking it does not matter where it is, just get the best rate.

Thoughts? What resources should she investigate (PenFed for home equity loans for example). Thanks in advance.

runner540
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Re: Student loan vs. home equity loan

Post by runner540 » Fri Nov 15, 2019 4:42 pm

I would try to refi the student loan to a lower rate long before turning unsecured debt into secured debt.
If your friend passed before the student loan was paid off, it would be forgiven. A mortgage would not be.
Last edited by runner540 on Fri Nov 15, 2019 4:50 pm, edited 1 time in total.

delamer
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Re: Student loan vs. home equity loan

Post by delamer » Fri Nov 15, 2019 4:45 pm

There is no such thing as “refinancing into your existing home loan.”

She can do a cashout refinancing of $187,000 with a new loan, where she gets $47,000 to pay off the student loan and $140,000 to pay off her current mortgage.

My credit union is showing rates of 4% to 6% for a $47,000home equity loan, depending on the term length.

Clarice
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Re: Student loan vs. home equity loan

Post by Clarice » Fri Nov 15, 2019 4:52 pm

Way too creative. Just refinance with a SoFi or some such student lender.

Cyanide123
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Re: Student loan vs. home equity loan

Post by Cyanide123 » Fri Nov 15, 2019 5:36 pm

I'm pretty sure earnest just offered be 3.5 percent a little while ago for my student loans.

Plenty of student loan refinance companies that will give a bonus and have no refinance fee. To name a few: earnest, sofi, laurel roads. There are others on the whitecoatinvestor website with links to bonuses

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Marmot
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Re: Student loan vs. home equity loan

Post by Marmot » Fri Nov 15, 2019 9:20 pm

Thanks

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