Student Loan Cash Out Refinance

Are you struggling to pay off your student loan debt and make your monthly mortgage payment? Does it feel like you are shoveling out money each month only to barely see a dent in the amount due? Well we might have the answer for you.

A recent client we worked with came to us in the same boat. For years she had been paying on pesky student loans that had not really gone anywhere. The balances felt like they were barely moving and some months she swore the balances somehow went up!

Each month she would pay $356 to one student loan, $195 to another and her mortgage payment was $2,644; bringing her total payments to $3,195 each month and her total interest over the life of the loan set to be over $191,000! Her original mortgage loan began in 2015, with a rate of 3.5%. She has already lived in her house for 18 years, but still had 25 years remaining on her mortgage. Over the years she refinanced into 30-year terms; simultaneously resetting her mortgage each time.

She decided to reach out to us about different refinancing options. Right away she knew she did not want to refinance into a 30-year term because she did not like the idea of resetting her mortgage and starting another new 30-year loan again.

We priced out different terms of the loan and realized that the 15-year payment was where she wanted to be, but the monthly payment was slightly too large to add on top of her student loan payments. So, we let her in on a secret.

Fannie Mae actually offers a little-known guideline that allows you to cash out and pay off student loans but still get a rate and term refinance rate (cash out refinances typically have higher interest rates then Rate and Term).

In the end the client chose to go with a 15-year term with a 2.235% fixed rate and pay off her student loans which had been going nowhere for years. Paying off the student loans saved her $550 every month. Although her new mortgage payment went up $625 per month to $3,272, it is only $75 more per month than what she had been paying in total for her mortgage and student loans together. Her new interest paid over the life of the loan was now $88,533, so in the long run the cash out refinance saved her over $90,000 in interest charges over the life of the loan.

She is now really looking forward to having her house paid off before she retires!

If you think a Student Loan Cash Out Refinance could benefit your situation give us a call today 801-206-4343 or email Anthony at anthony@alvmortgage.com and let us get started on running the numbers to find the best option for you.

NMLS # 888979.