Q: If I could get a home equity loan to pay off my large amount of student loan debt, would this be a good option?
A: While it may be a possibility to pay off student loan debt using a home equity loan, there are many factors to consider when looking into using a home equity loan to pay off your student loan debt.
First, consider looking into a student consolidation loan if you are having trouble with high monthly payments. While student loan consolidation, may extend the lifetime of your student loans, one benefit to student loan consolidation is reducing your monthly student loan payments into something more manageable.
Second, some student loans are more flexible than other types of loans, when it comes to your repayment and forgiveness options. By paying off your student loan debt with a home equity loan, you could be waiving some of the options that your student loans (or a student consolidation loan) offer.
Third, using a home equity loan to pay off student loan debt may convert unsecured student loans into debt secured by your home. This could place your home at risk should you miss or are unable to make the monthly payments on the home equity loan.
Finally, you would have to make certain that it made sense financially for you to pay off your student loan debt with a home equity loan. Compare the interest rates on each loan(s) and take into consideration if the rates are fixed or variable. Since each individual’s financial situation is different, seeking one-on-one advice from a financial professional before locking into a new loan is recommended.