Plus loans vs home equity/mortgage loans

standrews
Mon, 26 Apr 2010 06:02:42 +0000

OP,

Refinancing a mortgage should reduce your monthly payment, perhaps significantly. Lopping $400/month off your payment should free up $4800/year to help pay for college. You won’t save enough to help with the tuition bill due later this summer, though. When you no longer have children in college you can accelerate payments on the principal if you like. I have taken an approach similar to this and it has worked well. It minimized the amount I had to increase the mortgage by when refinancing and provides a lot of savings power and financial flexibility. I don’t have to worry about a HELOC being closed out either. Not everyone is in a position to do this, but you sound as if you might since you have owned your house for many years.

The present financial aid system does not penalize frugality; it expects frugality. Income above a certain level gets hit hard. Assets incur a smaller hit, 5%-6%. But lowering monthly expenses escapes FA “punishment.”