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Questions About Student Loan Refinancing

Is it a good idea to include a $18,000 student loan in the refinancing of my home?

The loan is a 30 year fixed loan and I am taking it out to pay off credit card debt, other bills and a small amount will go towards fixing up my home. I could sell the condo in 12 months for almost 3x that of the loan amount. Right now I owe 1/6 of the market value.

Industry Expert answers:

Student loan interest is often deductible, rates are generally very low, and they’re often for extended periods of time. The longer you have to pay it, the cheaper those payments become over time.

I almost NEVER recommend paying off student loans with mortgage debt. I don’t care if it saves you another $50/mo. It’s just not a good idea. Unless for some reason you’re at some stupidly high rate on those loans? Anything over 9%, I’d consider it. Anything under, not.

What short term effect would the refinancing of a defaulted student loan have on my credit rating?

I recently consolidated a defaulted student loan and need to purchase a new vehicle. Approximately how much of an impact on my credit score will the consolidation have the day after it hits my credit report? I’m just curious if anyone could ballpark the number of points it could jump, with no other factors considered.

Industry Expert answers:

It depends. Your score may go down for a few months, because you’ll have a new loan on the report and passed due debts will still show up on your report. After a few months, it’s going improve.

Or it can go up, depending other factors.

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