What could go wrong?
Capitalizing off of its start as a student lender, SoFi and government-sponsored enterprise Fannie Mae announced a new loan option on Wednesday that allows homeowners to refinance their mortgage at a lower rate and pay down the balance of an existing student loan.
Under the new loan option, which is titled the Student Loan Payoff ReFi, SoFi stated that it will pay down the student loan by disbursing payment directly to the servicer of the student debt.
“People can pay off student loan debt and are left with one loan at the low rates that mortgage borrowers are enjoying in today’s market,” said Michael Tannenbaum, senior vice president of mortgage at SoFi.
Tannenbaum explained in an interview with HousingWire that there’s a big opportunity for borrowers to take out additional mortgage debt on their home thanks to the current low interest rate environment.
Typically, he said, student loans have a much higher rate than mortgages, making it better for borrowers to have more mortgage debt and pay off their student loans.
So instead of paying off your student loan in 5 or 10 years, you can stretch it out to 30 years!
It might cost 2x or 3x, but it’s a lower rate! 😆
At least the mortgage debt can be discharged in bankruptcy. You need to lose at least a couple limbs to free yourself from student loan debt.
Good point!
So, if you buy the cheapest house you can find, and/or qualify for, say a one-bed in Hesperia, you can convert your student loan into the mortgage, then file bankruptcy, erasing the entire obligation? Have I got that right?
Yep!
Well, hopefully President Trump will put an end to that before things go ape.