Student debt is a major problem in the United States. It’s currently estimated that borrowers owe a whopping $1.75 trillion in total, an average of over $28,000 per person.
Many Americans have no other choice than student loans when enrolling in post secondary education. The government continues to increase the cost of college and the only way to keep up is by taking out more loans.
If you’re one of the millions of Americans who are burdened by student loan debt, you’re probably looking for ways to get rid of it as quickly as possible. A great way to do so is through a cash-out refinance, which we’ll explain in this article.
What Is Cash-Out Refinance?
Cash-out refinance is a commonly sought -after loan for homeowners. It allows them to take out equity from their home in the form of cash. The cash can be used for various purposes, such as home improvements, consolidating debt, or investing in a small business.
A cash-out refinance differs from a traditional refinance in one key way: with a cash-out refinance, you are taking out a new loan that is larger than your existing loan and using the extra cash to pay off your student loans.
For example, let’s say you have a $300,000 mortgage with a 4.5% interest rate. You also have $50,000 in student loan debt with a 6.8% interest rate. You could do a cash-out refinance for $350,000, which would give you the $50,000 you need to pay off your student loans.
Why Take Advantage Of A Student Loan Cash-Out Refinance Program?
There are several reasons why you might want to take advantage of a student loan cash-out refinance.
Lower interest rates: by refinancing your student loans into your mortgage, you can take advantage of a lower interest rate. This will save you money over the life of your loan.
Single monthly payments: by consolidating your debt into one monthly payment, you can save yourself the hassle of making multiple payments each month. This can also help you stay on track with your budget.
Tax deductions: mortgage interest is tax-deductible, whereas student loan interest is not. This means that you can potentially save money on your taxes by refinancing your student loans into your mortgage.
While student debt can be a major burden, there are ways to get rid of it. A cash-out refinance is one such way. By refinancing your student loans into your mortgage, you can save yourself an enormous amount of worry and money in the long run.