Category: Lending Products
It's no secret that Americans are burdened with more student loan debt than ever. In the beginning of 2018, Americans owed over $1.5 trillion in student loan debt, spread out among nearly 45 million borrowers. This student loan crisis has sparked much debate over the potential solutions to ease the weight of student loan debt.
When facing the major expense of education, borrowing with a home equity loan or home equity line of credit may be a beneficial financial move for you.
How Does It Work?
As a consumer, your home is one of the most valuable assets you can have. That's why many homeowners are using home equity lines of credit to finance major items such as home improvements, medical bills, and in this case, education.
A home equity loan allows a homeowner to pay for big expenses by borrowing the equity of the home as collateral. In a home equity line of credit, the interest rates are usually lower, and they have a finite payoff term, unlike typical loans. Additionally, these credit lines can be used gradually over time, giving you the flexibility to borrow against your home equity, as long as you keep up with your payments.
First, you must be approved a specific amount of credit. Lenders can set the credit limit on a home equity line by taking a percentage of the home's appraised value and subtracting the remaining mortgage balance owed. The lender will also look at your income, debts owed, credit history, and other necessary finances to determine your credit limit and your ability to repay the loan.
Remember, every home equity plan is different. It is important to meet with a trusted lender and financial adviser to determine what plan is best for you. At Premier Source Credit Union, we understand the financial concerns of education and student loans. That's why we’re here to help you choose the best financial plan to manage your finances and student loans.
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