BrightPath understands that money can get tight when you are making a monthly mortgage payment and attempting to pay off your student loans at the same time. We are happy to let you know about our new student loan cash out refinance option to help you pay down your student debt faster. One important thing to note with this program is that you do not receive cash directly. Instead, it goes to your student loan servicer while you enjoy a potentially lower interest rate and the ability to eliminate your education debts in an accelerated manner.
How the Student Loan Cash Out Refinance Program Works
This program offers homeowners with debt from student loans an alternative to the traditional home equity loan. However, you still use the home equity you have earned to date to qualify. With that money, you can refinance several existing student loans into one loan and potentially reduce your monthly payment obligation. BrightPath will waive the loan-level price adjustment normally applied to home equity loans when you meet all qualification requirements. These include the following:
- You must pay off at least one of your outstanding student loans with the proceeds and all money from your student loan cash out refinance will go directly to your student loan servicer when you close on the new loan.
- You can only pay off student loans for which you have personal responsibility with funds from this program.
- The program does not allow for partial student loan repayment. You must intend to pay off at least one loan in its entirety.
- You cannot have your primary residence listed for sale at the time of your new loan disbursement.
- You cannot pay real estate taxes with the funds unless you have an established escrow account.
- You cannot use the funds to pay off delinquent taxes.
If you meet these qualifications and want to lower your student loan payments or possibly reduce your interest rate, contact us at BrightPath to learn more or to start your application.
Special Rule Relating to Cash Back
Some people feel confused by the term “student loan cash out refinance” because they think it means they will receive the necessary funds to pay the debts themselves as well as money to use for other purposes. However, the majority of the funds go directly to the student loan processor. You can receive a maximum of two percent or $2,000 over and above the amount required to pay off your student loans. We do not impose any limits on what you can do with that money.
Other Benefits of the Student Loan Cash Out Refinance Program
We have already discussed how using the equity you have built in your home can reduce your monthly student loan payment obligation and possibly lower your interest rate. It can also help to improve your credit score because it gives you a lower debt-to-income ratio. You could potentially take a tax deduction for mortgage interest and/or switch your home loan from an adjustable rate to a fixed rate mortgage. BrightPath looks forward to helping you explore whether our newest program is right for your financial situation.