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Home equity to pay off student loans?

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  • #16
    [QUOTE=Zaphod;n278242]

    Wait, you're paying 8-10k/month in student loan payments? What is your rate and why do you hate money?


    I’m trying to rid myself of student loans. 1.91% is the current interest rate. The 8-10K per month is with the extra payments I send each month.

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    • #17
      Originally posted by TXDoc21 View Post

      This is the reason I have been putting off refinancing. But to be done with student loans makes it at least worth the discussion.
      But you wouldn’t be done with your student loans, you’d just be calling them something else.

      Seems like a terrible idea. Playing a shell game. Getting rid of 1.9% unsecured debt for higher secured debt. Wouldn’t do it.

      Do the refi calculation. If break even if shorter than anticipated duration of occupancy, refi. Otherwise stay put.

      Also, don’t know why you’d save cash for a down payment when you have 4% mortgage debt. The arbitrage between that and 0.5% is likely over 2.5% even considering taxes if itemized.

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      • #18
        Originally posted by VentAlarm View Post

        But you wouldn’t be done with your student loans, you’d just be calling them something else.

        Seems like a terrible idea. Playing a shell game. Getting rid of 1.9% unsecured debt for higher secured debt. Wouldn’t do it.

        Do the refi calculation. If break even if shorter than anticipated duration of occupancy, refi. Otherwise stay put.

        Also, don’t know why you’d save cash for a down payment when you have 4% mortgage debt. The arbitrage between that and 0.5% is likely over 2.5% even considering taxes if itemized.

        I think in the end this is why I won’t do it. But thought it was worth a question.

        maybe I’ll rephrase the question and change it to “I’m going to buy matching Tesla Plaid for me and my wife.” That will get lots of interest.


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        • #19
          Originally posted by TXDoc21 View Post

          I agree with the refinance the mortgage because of the rate. 4.35% is so 2017
          Not really, I was shopping for rates in 2019 for zero down loan and got 4.25%. Lenders all said I had a high debt:income...I’m family med, not everyone on here is ortho/derm/rads

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          • #20
            Originally posted by Dontgetthejab View Post

            Not really, I was shopping for rates in 2019 for zero down loan and got 4.25%. Lenders all said I had a high debt:income...I’m family med, not everyone on here is ortho/derm/rads
            Yes, I just mean that 4.35% isn't as sexy as some of the other rates posted on here. That's what I was saying in the beginning is that I haven't done it because we plan to move in the next few years and just didn't want to go through the hassle.

            I was paying off the mortgage early, but decided to just save that money earmarked for that in my down payment fund for the new house.

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            • #21
              When I went to refinance last time my bank offered me another pathway that they called a "note endorsement". For about 1/3rd the cost of the refinance I was able to get my loan down to 2.3% instead of the 2.25% by going with a full refinance. Only the rate changed, my term was the same number of months from before we lowered the rate. Just one form, no appraisal or any other hassles.

              Refinancing itself isn't really that much work. Just run the calculators to see if is worth it.

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              • #22
                [QUOTE=TXDoc21;n278243]
                Originally posted by Zaphod View Post

                Wait, you're paying 8-10k/month in student loan payments? What is your rate and why do you hate money?


                I’m trying to rid myself of student loans. 1.91% is the current interest rate. The 8-10K per month is with the extra payments I send each month.
                So your interest rate is comparable to dividends on SP500? Crushing a simple interest debt over compounding asset at young age is def not the best, especially over the last year.

                Maybe there can be some wiggle room for when the market crashes you just pay minimum and build some future wealth up.

                Comment


                • #23
                  Originally posted by VentAlarm View Post

                  But you wouldn’t be done with your student loans, you’d just be calling them something else.

                  Seems like a terrible idea. Playing a shell game. Getting rid of 1.9% unsecured debt for higher secured debt. Wouldn’t do it.

                  Do the refi calculation. If break even if shorter than anticipated duration of occupancy, refi. Otherwise stay put.

                  Also, don’t know why you’d save cash for a down payment when you have 4% mortgage debt. The arbitrage between that and 0.5% is likely over 2.5% even considering taxes if itemized.
                  Yet the mortgage version comes with benefits for the borrower that are currently not enjoyed by student loans, the difference is not small.

                  Money is a bit of a shell game, its fungible is it not? You would ask for or expect more/less return/cost for money with more/less restrictions and to me this makes perfect sense in that regard.

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                  • #24
                    [QUOTE=Zaphod;n278422]
                    Originally posted by TXDoc21 View Post

                    So your interest rate is comparable to dividends on SP500? Crushing a simple interest debt over compounding asset at young age is def not the best, especially over the last year.

                    Maybe there can be some wiggle room for when the market crashes you just pay minimum and build some future wealth up.
                    I’m doing a hybrid approach. Not all of extra money is going to student loans. I’m directing more money to my taxable account each month.

                    instead of going all in to taxable I’m trying to also get the elephant out the room/monkey off my back (student loans). I realize it is not the best financial decision to pay down low interest debt, but it feels like the right behavioral decision that will give me piece of mind and flexibility.

                    Comment


                    • #25
                      Originally posted by Dicast View Post
                      When I went to refinance last time my bank offered me another pathway that they called a "note endorsement". For about 1/3rd the cost of the refinance I was able to get my loan down to 2.3% instead of the 2.25% by going with a full refinance. Only the rate changed, my term was the same number of months from before we lowered the rate. Just one form, no appraisal or any other hassles.

                      Refinancing itself isn't really that much work. Just run the calculators to see if is worth it.
                      I will call my bank and see if they offer this. Thank you!

                      Comment

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