Does it make sense to refinance a mortgage to pay for college?
Don t confuse refinancing with a home equity loan or equity line of credit. Refinancing is more involved. You are actually paying off your existing mortgage and replacing it with another mortgage. Refinancing is attractive if interest rates have fallen sufficiently to realize lower effective mortgage payments. The lower payments may free up monthly cash flow, which can be used to fund college expenses, or you can increase the amount of your mortgage to cover the expected cost of college. This allows you to finance college expenses with a tax-deductible loan, make monthly payments over a longer period of time and have a more disciplined payment structure. The drawbacks are that it does reduce the equity in your home, increases the risk of possible foreclosure and may cost more in interest charges if the term on the new mortgage is greater than the remaining term on the existing mortgage. For example, if you have 10 years left on your current mortgage and refinance for 30 years, your tot
