Greenbook: A Local Guide to Chesapeake Living - Issue 6 | Page 33

Mortgage

Refinancing
story by: Bill regan
Vice President, C&F Mortgage • NMLS # 164409 • 410-370-0276

I

n fall 2014, some 21 million
American students headed
to college, an average
annual expense of around
$10,000 per year, per student
for a public, in-state school,
$23,000 per year for a public
out-of-state university and an
average of $32,000 per year for
a private college. The fact that
our children are continuing
their education and eventually
bolstering the power of the
American work force is a great
thing. Nevertheless, college
costs an impressive amount of
money and that cost can be a

significant financial obstacle for
many families to overcome.
Families struggling to configure a
reasonable way to pay for college
might want to consider utilizing
the equity in their home to cover
the cost. By the time children
head to school, most homeowners
have been paying down their
mortgage for several years. As
interest and principal are paid
off, and as property values rise,
the equity in your home increases,

leaving you with a potential fund
that could be enough to get your
family over the college hump.
Before considering if using your
home as a financial resource and
educational investment is right
for your family, you should
consult with a mortgage
professional to see whether or
not your home qualifies for
financial restructuring and also
to discover if your property value
will appraise for enough to cover
the costs and terms under a new
loan.
There are two ways to access the
equity in your home. Both require
redefining, or re-financing, the
original terms of your home loan.
The first method of mortgage
refinancing is called a “rate and
term refinance”, which essentially
means you change the interest
rate and repayment terms of your
original loan without advancing
new money from the bank. This
differs from a cash-out refinance,
in which you receive a substantial
cash payout upon closing, based on
the equity in your home.
Rate and term refinancing can
carry lower interest rates than
cash-out refinances and are
advantageous when the home
is held on an adjustable rate
mortgage, a fixed rate higher
than the current federal interest
rate or when the federal interest
rate has lowered substantially
enough that closing costs are
greenbook | fall & Winter 2015

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