As the cost of a four-year education rises, so too does student debt. The statistics are pretty alarming. The most recent reports indicate there is:

  • $1.44 trillion in total U.S. loan debt owed by  44.2 million Americans
  • The average 2016 graduate owes $37,172.
  • The average 20-30 year old borrower owes $351 per month.
  • Almost 5 million borrowers are more than 90 days delinquent.
  • Students earning graduate and professional degrees have it worse:

-         MBA grads owe an average of $42,000

-         JD grads owe an average of $140,616

-         MDs owe an average of $161,772

And student loan rates are set to increase in July by as much as 20%.

There are many companies touting schemes to help pay off or refinance the debt, but the best deal is now offered to homeowners with sufficient equity.

It‘s a government-sponsored (Fannie Mae) guideline change which allows a borrower to extract cash from their property to pay off student loans without incurring the usual penalties for “cash-out” transactions.

Depending on the amount of equity in a property, those penalties could have cost a borrower more than $6,000 under the old rules, or increased the interest rate by as much as .375%.

Under the new rules, a borrower with a $500,000 loan at 4% and payments of $2,387 per month could incorporate $30,000 in student debt and borrow $530,000 at 3.875% and have a payment of $2,492, only $105 higher. If they’re paying $350 per month for the student loan, that cuts $244 from their monthly bills.

Not all borrowers will qualify, but if you or any homeowner you know has student loans, a quick call to Finet will provide the answers you need.

Call us at 408-872-8100

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