Using Your Home Equity To Fund College

Using Your Home Equity To Fund College
  • Opening Intro -

    A lot of parents in America are looking for ways of paying for their child’s college. A big percentage of the parents find it difficult to fund for their child’s degree from their income or savings.

    Luckily enough, there is an option of using your home equity to fund college.

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A lot of parents in America are looking for ways of paying for their child’s college. A big percentage of the parents find it difficult to fund for their child’s degree from their income or savings. The average annual cost of college in a 4-year public school is about $23,000.

For a private school, it would cost an annual fee of about $46,000. This is why many parents find it difficult to handle the college costs of their children. Luckily enough, there is an option of using your home equity to fund college. So is it possible to fund your child’s higher education with your home equity?

Yes, it is possible. If you own a home, you will need to complete a mortgage application and an FAFSA, Free Application for Federal Student Aid, for college funding.

Why use your home equity for college funding?

They are quick and easy

If you need to get the funds in a rush, you can depend on a home equity loan. They are easier to apply, and you can get the funds in the shortest time possible.

Suppose you already have an equity line of credit, you can write a check directly from the equity line to fund the education of your child. However, if you apply directly for a standard student loan, or borrow by co-signing, there will be the need to apply for credit and complete the loan process.

You can view more information how a home equity can be part of our college related financing.

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Interests are tax deductible

The home equity line of credit interest is tax deductible. The student loan interest, on the other hand, will allow a maximum of 2,500, which is deducted annually on the interest you pay.

Limited restrains

The federal student loans, which you can obtain using your home equity, don’t need a co-borrower or a credit check.

Nonetheless, there are a few limitations imposed by the American Department of Education. Some of them include $5,500 in the course of the undergraduate’s first year, $6,500 for the second year, and the third year onward is $7,500.

Verdict

Using home equity to fund college can be a great option though you should be prepared for a few limitations. For instance, if you fail to pay back the loan, you could lose your house. This is the best option if other financial sources do not have persuasive terms.

Also, if the education has a higher job prospect, then you can use your home equity. When the student gets a job, it will be easier to pay off the loan.

So, are you stressed about how you can pay for your child’s college, yet you are a homeowner? Now you know how you can use the home equity to fund your child’s education.

Do you also want to help someone who can use their home equity for college funding? Then share with them this post on Facebook, and you could save them from the burden of college funding.

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Categories: Finance