Fannie Mae recently announced a student loan refinance program, which allows homeowners to use their homes’ equity to pay off student loan debt. This is a special program, and even though you’re tapping into your home equity, you are not getting charged a “cash-out refinance” rate.
Here are some details and requirements:
- Conforming and high-balance loan amounts
- Fixed and Adjustable loan programs allowed
- Loan proceeds must be paid directly to the student loan servicer at closing and through escrow
- Only student loans for which the borrower is personally obligated can be paid through the transaction
- Student loan debt must be paid in full; no partial paydown is allowed
This can be a great opportunity to take advantage of current low mortgage interest rates (typically lower than student loans), and if you opt for a 10, 15 or 20 Year Fixed rate mortgage, the payoff time would be similar. Contact me for additional questions and details!