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Cash Out Refinance + Student Loan Payoff

Updated: Jun 15, 2021

Spring is in the air! Which, for some, means it’s time for some spring cleaning! Clearing the clutter and putting things in their place can be refreshing. It gives you an organized home and clear mind so you are ready for all the growth that the warmer months bring! Sometimes clutter is more than the stuff in the back of your closet – it can be anything that stands between you and the life you want to be living.

Perhaps a high interest student loan payment is bogging down your monthly bills.

Perhaps your mortgage payment is higher than it needs to be and you’ve been wondering if its time to refinance.

Perhaps BOTH.

If this sounds familiar, the Student Loan Cash Out Refinance may be an excellent option!

What is a Student Loan Cash Out Refinance?

This option allows you to use a cash out refinance to payoff your high interest college loan and take advantage of some of the lowest interest rates in history. Additional benefits of the program:

--Avoid Cash out Refi Fees and Rates: Directly paying your student loans in the refinance process causes this refinance not to be considered a cash out refinance. This allows the borrower to avoid the extra fees and higher interest rate that typically apply to cash out refinances.

--Easier Qualification: Lenders are allowed to accept student loan payment information on credit reports and certain debts are excluded from the borrowers DTI. This can make it more likely for borrowers with student debt to qualify.

What does it mean for your monthly payments?

Often times your new mortgage payment will be less than the combination of your previous mortgage and college loan payment. The program helps borrowers to save monthly, as well as save significant interest over the life of the loan.

Who can take advantage of the program?

This Program can be used by anyone who has a student loan (even a parent or relatives). If co-borrowers are applying, at least one must have an outstanding student loan.

Are there other factors to consider?

-- Proceeds must pay at least one student loan in full, partial loan payoffs are not allowed.

-- Borrower may not receive more than 2% or 2,000 whichever is lower from the transaction.

-- There is no deferral program for mortgage payments - which can be an option in some scenarios with a student loan.

-- Rolling your student loan into your mortgage could significantly increase your mortgage and decrease equity in your home.

-- You may miss out on a tax deduction. Student loan interest is tax deductible. Mortgage interest can be deducted only if you itemize - which may not be likely with the current $24,000 standard deduction (for married couples filing jointly).

The conclusion?

There is some equity required, rules that must be followed and a few factors to consider, but in many cases it is an excellent option. In many cases you can lower your overall monthly expenses, consolidate debts AND save on interest over the life of the loan!

Contact the mortgage experts at Simplicity today 386-401-9000 to discuss your situation and determine if this program may help you clear the clutter and achieve your financial goals!


Simplicity Mortgage is a local mortgage broker company located on 411 Dunlawton Avenue in Port Orange, Florida. We serve borrowers looking for loans in the central Florida area to include Volusia and Flagler counties, Palm Coast, Ormond Beach, Ormond by the Sea, Deland, Daytona Beach, Daytona Beach Shores, Port Orange, Ponce Inlet, New Smyrna Beach and all surrounding areas. We have a portfolio of 20 lenders, which allow us to find the best home loan product for a borrowers unique purchasing scenario. Our mission is to provide a simple and smooth customer experience coupled with an excellent rate and low fees. We are your accessible, single point of contact throughout the process.  We offer a full suite of loan products: Conventional, VA loan, FHA loan, USDA, Jumbo, Non Qualified Mortgage (non-QM), Self Employed, 1099, first time home buyer, investment, and secondary property purchases.  We have excellent options for your refinance as well, IRRRL, Home Equity Loan, Streamline Refinance, Cash Out, Rate and Term.  Give us a call today to discuss current mortgage rates.  We will utilize our mortgage calculator to assess the mortgage payment with various mortgage rates for your home loan to help you determine the best financial fit for your purchase.


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