August is here, which means it’s officially the kickoff to back to school season. A good education goes a long way in life, but sometimes obtaining that education costs a pretty penny! As a parent, you’ll do anything for your children to succeed, which may require getting creative to help them afford their education.
Opting to refinance your home is one way to help pay for your child’s education. With the current interest rates and high home values, refinancing can be a great avenue for cashing out your home’s equity and putting the dollars toward education costs. Below, we’ll highlight a few refinance options that may fit your needs!
What Is a Refinance?
Anyone who obtains a mortgage on a home will choose a loan program with repayment terms that include a specific number of years to repay, an interest rate, and an APR on the amount borrowed. Along the homeownership journey, the real estate market will fluctuate, and interest rates may increase or decrease. Sometimes, those fluctuations make refinancing a smart decision. Refinancing gives homeowners the ability to change their payment terms and often offers a lower interest rate that can lead to lower mortgage payments. Additionally, if there is a fair amount of equity in the home – whether it’s from living in the home for many years or if home values have increased significantly – that equity can be used to fund things like home improvements or education.
What Is a Cash-Out Refinance?
A cash-out refinance will replace your existing mortgage with a new, larger mortgage and you’ll receive the difference in cash. Your new mortgage will also have a new interest rate that falls in line with the current market rates. While a larger mortgage will likely increase your monthly mortgage payment, you may find that paying a bit more on your mortgage each month is still more cost-effective than the alternative of repaying student loans.
Should I Refinance to Pay for My Child’s Education?
There is no right or wrong answer to this question, but it’s certainly something you should think carefully about before moving forward to see if the short- and long-term benefits are worth it for you! If you opt to refinance when rates are low, you may be able to save money on your mortgage and still be able to cash out for college funds, too!
When you’re ready to talk about refinancing, C&F Mortgage is here for you. Our team of local industry experts will help you navigate your refinance options and determine if it’s the right fit for you. Get in touch with us today to learn more!