How To Save Money For Your Child’s Education
This couple has done everything right with the exception of saving for their children’s education. There are many ways to save such as education plans, savings accounts and even insurance plans. However they are not in a situation where they have the time to save, so we will focus on some of the other areas they can turn to since they did not save money for their child’s education.
Before any money is borrowed, both kids should determine if they are eligible for any scholarships (sports or educational) related. Next they should explore student loans, however always compare the cost of the loan with anything you may borrow on a personal level. In some case you are not charged any interest as long as the kids are in school.
A mortgage should really be the last resort. This family, if they need to, should consider a line of credit which would be based on the amount of equity they have in their home. Depending on the value, they may be able to arrange a line of credit for the entire amount of what they need to fund their child’s education. The advantage of a line of credit is that a consumer can draw on it as needed and also pay it back as fast or as slowly as they need. They must always pay the accumulated interest each month as a minimum payment. Interest rates can also go up and down so it is important to take an interest rate increase into account since all of the bankers are suggesting this will happen soon.
If they only need twenty thousand in the first year that is all they need to borrow. They can start paying that back as soon as they can in regular monthly payments. Scholarships, student loans coupled with a line of credit are the best approach to take always focusing on minimizing the total interest cost on the amount you need to borrow.
DEFAULT LOAN APPLICATION FOR BORROWER’S INFORMATION
Home/Mortgage Loan Amount :: $100,000
Home Loan Application and Processing Speed (when do you need the funds):: this is for our son’s education, so we need the money over the next 3 years for tuition, books and living expenses
Do you currently have a mortgage? ::No, our home is fully paid for
Bank Name and Branch ::Bank of America, Desert Inn Road
What City/Town, State and County do you live in? :: Las Vegas , Nevada
What is your employment field? :: Casino Service Industry
Employment Position :: Operations Manager
When are you paid? (monthly/weekly/biweekly):: biweekly
Your credit rating to be – excellent, fair, or bad? :: excellent
How did you find us? :: looking for information on how to save money for a child’s education
How are you paid? (direct deposit/paper check):: direct deposit
Gross Amount Per Paycheck :: $2500
Do you agree to have this information published online, without your PRIVATE information of course? :: sure, maybe it can help other parents in our situation
Extra information here please (some detail):: We thought we had done everything right with regards to our finances. We pay all of our bills on time, never missing any mortgage, utility, tax or credit card payments. We have paid off our home and we just have a small balance left on our car loan. Throughout life we have saved, set aside money for emergencies and have got to a point in life where we are debt free. We even survived the housing crisis, although we were both out of work for a short while and the value of our home dropped. Still we own it and it is fully paid for. Our credit rating is excellent and we are pretty happy about the situation we are in with one item still bothering us.
We have two children who are about to begin university and will need some help with their education. They are both going to continue living at home to keep costs down, but tuition is very expensive along with the cost of books and materials. They are going to need our help, although they both intend to take part time jobs while attending university. We believe in no free lunch so they will work hard at school, but also at their jobs if they expect to get our help.
Note to Lender :: The problem is that we did not plan for this. No one in our family has ever gone to university and I guess we just assumed that our kids would not want to go either. However in today’s environment young people really have no choice if they want to get a good job that pays reasonably well. They have convinced us and we are willing to help out.
We have some savings which we really should not touch. This is for retirement and also for emergencies. We are thinking about taking out a mortgage on our home to finance the kids education. We do not like the idea of borrowing all of the money and having to pay interest on the total amount if we do not need all of the money right away. We think that we need somewhere between twenty and thirty thousand a year. Both our kids and ourselves will be paying back this loan or mortgage as quickly as we can.
Can you make some suggestions as to how to proceed?
|Category: Home Mortgage Loan||APR 6%||APR 5%||APR 4%|
|Length of Term||15||25||30|
|Amount to be paid||$145,246.67||$162,705.57||$160,164.38|
|Total interest paid||$45246.91||$62.705.57||$60,164.38|
|Paid per installment||$795.87||$534.92||$548.81|