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I'm considering refinancing my mortgage to use part of my equity to pay off school loan debt, which I'm struggling to afford monthly.
4 years ago I bought a condo for $128,000 that is now worth $195,000 today. I owe $110,000.
Since then, I went back to school and took out 35k in student loans to make a career change.
I now have an entry-level job in my new field and I'm being paid an entry-level wage. My student loans are entering repayment at about $560 a month and they are high compared to my monthly net of $1,700 before other bills. I will have very little room to afford that $560.
Even if my interest rate goes up on my new mortgage, should I considering a refinance so that I can pay off the schools loans w my equity cash out to take away the current financial and emotional burden of the student loans?
Cons:
-Real estate prices could plummet ala 2008 and I'd owe more than my place is worth.
-My mortgage is 3.5% with no PMI and current interest rates are higher.
-I've had my mortgage for 4.5 years and understand my amortization schedule will reset.
-Over the span of my lifetime, doing this will cost me more money to relieve the pressure of these payments that I feel right now.
Pros:
Pay off all my debts (besides my mortgage)
To summarize:
MY SALARY<SCHOOL LOAN PAYMENTS
EQUITY>SCHOOL LOANS
Do you have any suggestions on where the best place for me to start with talking to lenders about refinancing would be?
Is it a private or federal loan? If the former, get on income based repayment. If private, contact the rate reduction department. They will lower the payment and the interest for 12-15 months. If you need to renew, you can.
I don't think it's a good idea to put your house on the line since you're going to go further in your career and not be stuck in the same wage .
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