The best type of loan to help pay for tuition depends on your short and long term financial and investment plans. A Home Equity Line of Credit may be a loan to help you pay for college or it can be refinancing your mortgage into another 30 years. The fact of the matter is, that you will have your own mortgage plan that will help you fund your college tuition or your children.
College Fund Planning is one of my areas of concentration. In order for you to take out a loan to pay for tuition, you must sit with a Mortgage Planner that will conduct a Mortgage Analysis. The Mortgage Analysis will determine what areas we need to focus on so we can make this college fund planning a successful get together.
Here is what I do for my clients to help them plan for college through home equity. This is something you may even want to consider. After taking the loan application, I determine whether restructuring debt, amount of cash needed, and type of mortgage (Based on several factors). For example, let’s say we had a young married couple with children and a home wanting to save money for their children’s college education, but couldn’t due to consumer debt and other expenses. Furthermore, let say, for example, that they wanted the lowest payment possible so they can save for college and still have a life. They don’t plan on going anywhere for the next 8 years.
In this hypethitical example, I would offer my clients a 10/1 LIBOR Interest Only. This mortgage will give them the opportunity to consolidate their debt, take out some equity for college savings, and keep their payment low. Debt consolidation will give my clients the opportunity to maximize cash flow. This mortgage will also help them reduce their tax liability because they have paid off all non preferred interest such as credit card interest. Once the transaction has been completed, I would refer them to a Financial Planner who will take the time to set up a plan to help them achieve their objectives with college fund planning through the power of compound interest in their investment.
There is no such thing as the best type of loan to pay for college, but the best mortgage you can select that can be easily integrated into your overall short and long term financial and investment plan. Take the time to meet with a Mortgage Planner that will provide you with great advice based on your objectives. I hope this answered your question.
This is a great question and a common one amongst homeowners who have children in their later years in high school. However it really depends on your preferences. A proper mortgage professional should sit down with you and discuss at length the following things before deciding what type of loan you should take:
Your goals for your childs education
How much tutition will be yearly including food, books etc
What you can afford to pay monthly and if you are comfortable with an adjustable rate mortgage or a fixed rate mortgage
Before any type of loan is proposed or suggested you should review these three items very carefully and in depth.