Home Equity Lending

home equity lending notes

You can use the equity value in your home to finance college education. Use a home equity credit line to pay college expenses as they occur. The flexibility of the credit line allows you to control expenses and budget repayments.

The amount you can borrow is subject to the equity value of your home. The best interest rates are available for equity credit lines at 80%LTV or lower.

  • Loan Amounts:
    subject to the LTV value of your home: see LTV calc
  • Payment Begin:
    25-30 days after a line disbursement
  • Interest Rate:
    variable and subject to your LTV position
  • No Restrictions:
    can use funds for any expense

Pro and Cons of Stafford Loans

home equity lending notes

Advantages (Pros):

  • Total Independence
    you do not need to file federal forms or work through the college processing systems; you simply use your home equity credit line to pay all related college expenses (up to your assigned credit limit)
  • Low Interest Rate
    depending on your LTV position, your interest rate can be as low as the PRIME rate or lower
  • Flexible Repayment Plans
    you can use your equity line to draw upon funds as needed while the student is attending school. By depositing your income into the equity line account, you can repay the borrowed funds at minimal cost
  • One-Time Application
    you only apply once for your home equity line; you can draw upon available funds anytime you need money regardless of student's time in school
  • Use Funds for Anything
    you can use your home equity for any expense; you are not restricted on use of funds

Disadantages (Cons):

  • Credit Check Required
    you must have a credit history and verifiable income in order to qualify for this loan. You must also have enough equity value in your home to secure your loan:
  • Home Is Your Security
    your home equity is secured by the equity value of your home; you could potentially lose your home if you default on your loan payments
  • Rate May Be Higher
    depending on your LTV position and amount borrowed, your interest rate may be slightly higher than PLUS loan rates
  • Funds May Be Limited
    the amount you can borrow depends on your LTV value of your home; if your equity value if low, you may not have enough borrowing funds to pay for college expenses

Why Use an Home Equity Line

home equity lending notes

They Grow Up Fast!

Only yesterday, it seems, they were learning to read. Now they will be packing the car for college. It's an exciting time for them. But for you, it's all about cost?

  • tuition and fees
  • books and lab fees
  • monthly housing and food
  • recreation
  • transportation
  • trip home for the holidays

We Have a Solution

Use the equity in your home to pay college expenses as they occur. And while you're at it:

  • fix up the room that is now empty
  • consolidate some bills
  • finance the car your child will use
  • you decide: ________________

Why an Equity Line

Using your home equity as a "College Educator" lets you finance college expenses as they occur.

Instead of borrowing the full amount for college, simply use your "home equity line of credit" to advance the funds as you need.

You will pay interest only on the amount you borrow, which interest cost may be deducted from your taxes if you qualify. You won't find similar benefits with other college funding products. Consult your tax advisor to see if you qualify.

You can use the line whenever you need. It's like becoming your own banker. Simply advance money to pay for college expenses ... when you need ... as you need.

Benefits

home equity lending notes

  • Get a Line of Credit
    open a line of credit up to your approved LTV level — calculate how much you can borrow
  • Anytime Access
    access your account as you need . . . when you need
  • Payment Flexibility
    pay minimum monthly payments or any additional amount when you have extra cash
  • Re-use the Line as Needed
    pay down the account to zero with no prepayment charges and reuse the line over again up to your approved available balance
  • Tax Benefits:
    deduct interest charges from your taxes if you qualify
  • Competitive Rates:
    get competitive adjustable rates as low as the PRIME RATE
  • Benefits Can Vary:
    benefits may vary by lending institution

Sample Rates

home equity lending notes

Below is a sample of rate ranges based on a review of national lenders. Your quoted rate is calculated by taking the Prime Rate and adding a margin. Your lender will quote a margin based on your LTV, credit position, and relationship with the lender.

Home Equity Financing
Prime Rate: 3.50%
Sample Rate Range * LTV Type
PRIME RATE+
(-0.50 to 0.25%)
80% LINE
PRIME RATE+
(0.25 to 1.50%
90% LINE
PRIME RATE+
(0.00 to 2.50%)
80% LOAN
PRIME RATE+
(2.50 to 3.75%)
90% LOAN

Get Started

home equity lending notes

Calculate How Much You May Need

Add Up Your Costs
Tuition
Housing-Food
Books-Supplies
Laptop-Software
Transportation
Other
Enter $$$ You Now Have
Stafford Loans
PLUS Loans
Scholarships
Work Wages
Other Gift Aid
Personal Savings
Total Cost
Total Aid
Extra Funds Needed

Who Qualifies

stafford student loan notes

Different eligibility loan amounts will be awarded for dependent and independent students

  • students who have access to parental support are classified as dependent students
  • dependent students and their parents must report respectively their income and assets on the FAFSA form

Students who display at least one of the following requirements are classified as independent students:

  • you were at least 24 years of age on January 1 of the academic year you begin school
  • you are married
  • you are enrolled in a graduate or professional program (beyond the bachelor's degree)
  • you have legal dependents other than a spouse
  • you are an orphan or ward of the court (or were a ward of the court until age 18)
  • you are veteran of the U.S. Armed Forces ("veteran" includes a student who attended a U.S. military academy who was released under a condition other than dishonorable)

independent students must report only income and assets of their own (and those of their spouse, if married)

How to qualify for stafford student loans

To qualify for federal student loans, you must meet the following criteria:

  • display a need for financial aid (except for unsubsidized Stafford and PLUS loans).
  • complete high school and have been awarded a high school diploma or a General Education Development (GED) Certificate.
  • pass a college entrance exam approved by the U.S. Department of Education, and/or meet other standards your state may establish.
  • be enrolled or accepted for enrollment as a regular student working at least half-time toward a degree or certificate in an eligible program.
  • be a U.S. citizen or eligible non-citizen.
  • have a valid Social Security number, link to obtain SSN:
    http://www.ssa.gov/online/ss-5.html
  • make satisfactory academic progress.
  • sign a statement on the Free Application for Federal Student Aid (FAFSA) certifying that you will use federal student aid only for educational purposes
  • sign a statement on the FAFSA certifying that you are not in default on a federal student loan and that you do not owe money back on a federal student grant.
  • register with the Selective Service (for young men age 18 and over).
    you can register online:
    http://www.sss.gov

View: Becoming a Bank

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