I looked into using equity but with rates at about 7% I wasn't sure if that would be a good use of my equity. So it looks like I have two options then: 1- slightly lower fixed rate using equity or 2- hope that my current rates come down.
I really feel bad for any new grad that has to start a career with these ridiculous rates. Not a healthy way to start off.
Anyone using equity to help pay off student loans? It would be great to learn from your experience. Anyone have a good reason to believe rates will be coming down any time soon?
Rich
I also feel badly about the higher rates that students are facing. There is little good in higher interest rates on student loans. The only thing possibly good that comes out of it is the determination to get the high interest loans paid off asap. That is exactly what we did in the 80's when some of our interest rates were around 15%+. Had the interest rate been lower, we could be still paying them off today.
😀 I think you may have time on your side. If interest rates go down, I would definitely consider a fixed rate, home equity loan. Mortgage rates are down from last year already. There is definitely inflation, you or anyone going to school or with kids in school knows this, prices are going up, up and away, as are energy and utility bills, property taxes etc. But incomes are not and have not been rising accordingly for 30 years or so, at least that is the consensus from articles I have read. The economy is sluggish, especially the housing sector. The GDP is largely spurred by consumer spending. If interest rates go up, it could curtail growth. That is why I think, although there is inflation, it will be hard for the Fed to curb it by increasing rates, rather it may feel pressure to do just the opposite to keep the economy, mildly, humming. There are two very differing view on where interest rates are headed. If I were you, for now, I would keep an eye on your local banks advertised interest rates for home equity loans. If you see an appealing deal, move on it. Even if you take out a HEL (Home Equity Loan), usually, you can pay it off with no penalty and many times there are little, if any, origination fees attached. A fixed payment at least is predictable. Always know what you are signing, as best possible. It may be possible, ask your accountant, the interest on a HEL may be deductible, whereas interest deductability for student loans has income limits. However, too many deductions can throw you into the AMT, alternative minimum tax. I'm not an accountant just a dentist, who's trying to learn about this stuff all the time too. Good Luck.
