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CNBC
21-05-2025
- Business
- CNBC
Should I use home equity to pay for my kid's college?
College comes with a hefty price tag. If you own your home, you may be considering funding your child's education with a or a instead of taking out student loans. But should you? There are upsides to tapping into your home equity for higher education, but serious downsides, as well. Home equity loans and HELOCs are second mortgages that allow you to borrow against the equity you've built up while paying your mortgage. The money can be used for anything — home improvements, paying down debt and, yes, your children's tuition and room and board. A home equity loan is a one-time cash infusion paid back with a fixed interest rate, typically over 30 years. Rocket Mortgage, one of our top picks for home equity loans, will approve homeowners for up to 90% of their home's value, compared to 85% for most lenders. Apply online for personalized rates; fixed-rate and adjustable-rate mortgages are available. Conventional loans, FHA loans, VA loans, Jumbo loans, low-down-payment mortgages 10-, 15- and 30-year fixed-term conventional loans, 30-year VA and FHA loans, custom mortgages with fixed-rate terms from 8 to 29 years. 620 for conventional loans 0% for VA, 1% for RocketONE+, 3% for conventional, 3.5% for FHA, 10% to 15% for jumbo Already have a mortgage through Rocket Mortgage or looking to start one? Check out the Rocket Visa Signature Card to learn how you can earn rewards. Read our review of Rocket Mortgage A HELOC, meanwhile, is a revolving line of credit that lets you withdraw what you need during a draw period (typically 10 years), and then repay over up to 20 years. PNC Bank approves borrowers for HELOCs with credit scores as low as 600, compared to the industry standard of 640. Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included Conventional loans, FHA loans, VA loans, USDA loans, jumbo loans, HELOCs, Community Loan and Medical Professional Loan 10 – 30 years 620 0% if moving forward with a USDA loan Terms apply. Read our PNC Bank mortgage review College expenses will vary from year to year, based on tuition, financial aid offerings, housing, work study and other factors. So, a HELOC may be the stronger option if you're tapping into your home equity to pay for schooling: Its revolving structure allows you to borrow only what you need. So you've determined that you can leverage your home equity to pay for your child's college education. But is it a smart strategy? There are some pros: You'd get a lower interest rate than with private student loans and, if the The 2017 Tax Cuts and Jobs Act isn't renewed, you could deduct the interest on your HELOC or home equity loan from your taxes. However, these are secured debts that use your house as collateral, so if you fail to make timely payments, your lender could foreclose. Federal and private student loans are unsecured, so lenders can't seize your assets to recover losses. In addition, if you take out a HELOC or home equity loan, it would be considered additional income and could impact access to financial aid in the following year. Offers in this section are from affiliate partners and selected based on a combination of engagement, product relevance, compensation, and consistent availability.15 to 30 years50025%10, 15 or 20 years68020% There are many other ways to pay for your child's education than a home equity loan or HELOC. In most cases, it's best to exhaust all these options before you touch your home equity. Check what financial aid you're eligible for by filling out the Free Application for Federal Student Aid (FAFSA). Your child may also be eligible for federal loans, grants and scholarships, which will offset how much you need to take out with a private lender. Interest rates on federal student loans, like Parent PLUS loans, are typically lower than both private students and home equity products. Private institutions also provide students with grants and scholarships based on academic merit, athletic performance, civic involvement and other categories. According to SoFi, more than $100 million in college scholarships and over $2 billion in grants are left unawarded each year. This list connects students with grants and scholarships they may qualify for. If you've exhausted federal loans, scholarships, grants and other aid, there are also private loans available from banks and other lenders. Sallie Mae is known for offering low rates and not charging origination fees or prepayment penalties. Undergraduate and graduate students, borrowers seeking career training $1,000 minimum; maximum up to cost of attendance Range from 10 to 15 years Variable and fixed Deferment and forbearance options available Only for international students No Terms apply. See if your child's school offers a tuition payment plan, which allows you to pay off their bill over the year instead of in one lump sum before the semester starts. (There are also third-party lenders that offer payment plans.) When you sign a payment plan, however, you essentially out a short-term loan, and the consequences of late or delinquent payments can be more severe. You'll get hit with steep late fees, and you may not be able to graduate. Parents can start saving for college while their kids are still in diapers with 529 savings plans. Funds invested in these state-sponsored plans grow tax-free, and withdrawals are also tax-free as long as they are used for qualified education expenses. Starting in 2024, unused funds from a 529 plan can be rolled over tax-free into a account, effectively turning it into a retirement account. New York's 529 College Savings Program, managed by Ascensus College Savings and available in all states, is one of our top picks for these savings plans. You can put as much as $520,000 into the account. None $520,000 Options include age-based options and individual options Investors can choose funds from Vanguard mutual funds Total asset-based expense ratio: 0.12% Terms apply. You should consider many other options before going down this route, including financial aid applications, scholarships, grants, private loans, tuition payment plans and 529 plans. If you do decide to use home equity to pay for college, you should be sure that you can make on-time payments, though, because if you don't, the lender could force you into foreclosure. Unlike other financing, home equity loans and HELOCs are secured debts that use your house as collateral. If you fail to make payments, your lender can force you into foreclosure. You'll also lose equity in your home and funds received from a home equity loan could impact access to financial aid. You can determine your home equity by looking at what your home is worth and subtracting any outstanding mortgage balance. For example, if your home is worth $500,000 and you have $200,000 outstanding on your mortgage, you would have 60% equity ($300,000) in your property. Money matters — so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox. Sign up here. At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every mortgage article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of mortgage products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
CNBC
28-04-2025
- Business
- CNBC
Your rent payments can open the door to homeownership. Here's how
If you rent, it may feel like you'll never save enough to buy a home. But a new program from Rocket Mortgage is rewarding renters with up to $5,000 to make the dream of homeownership a reality Launched in February, the RocketRentRewards program provides renters with a credit worth 10% of their final year of rent payments that they can put toward closing costs on a Rocket Mortgage home loan. Apply online for personalized rates Conventional, FHA, VA, jumbo, HomeReady, Home Possible 10-, 15- and 30-year fixed-term conventional loans, 30-year VA and FHA loans, custom mortgages with fixed-rate terms from 8 to 29 years. 620 0% for VA, 1% for RocketONE+, 3% for conventional, 3.5% for FHA, 10% to 15% for jumbo Already have a mortgage through Rocket Mortgage or looking to start one? Check out the Rocket Visa Signature Card to learn how you can earn rewards Read our review of Rocket Mortgage A monthly rent of $1,800, for example, would net you a $2,160 credit. "Many renters feel like homeownership is out of reach, especially as they try to save money to take to the closing table," said Rocket Mortgage chief economist Bill Banfield. "RentRewards eases those concerns by rewarding clients for simply doing what they do every month: making their rent payment." The credit can only be applied towards purchasing a primary residence and applicants must provide proof of rent payments for the past 12 months, such as canceled checks, bank statements or a lease agreement. Closing costs include lenders' fees, title search and insurance, legal fees, home inspection and private mortgage insurance, and can be as much as 6% of the home price. For a $200,000 home, that could mean as much as $12,000 in closing costs. Along with saving for a down payment, expenses related to closing are among the top barriers to homeownership for Americans, according to data from the Urban Institute. "The sizes of the fees that make up closing costs vary significantly and lead to a regressive pattern of costs, which makes closing costs more burdensome for homebuyers with lower incomes and less wealth," the nonprofit think tank said in a January 2025 blog post. "This added burden poses yet another roadblock to first-time homebuyers seeking to buy starter homes, further constraining access to credit." Rocket Mortgage's RocketRentRewards program allows renters to submit proof of their final year of rent to earn a credit of up to 10% that can be put toward a home financed through the online lender. According to Rocket Mortgage, this is the first program in the industry to reward renters with closing cost credits. "Closing costs" is an umbrella term given to the various expenses paid when closing on a home sale, including your application fee, origination fees, the cost of having the home appraised, title search and insurance, attorney fees, several months' worth of property taxes and the first year of homeowners insurance. Both buyers and sellers incur closing costs, but there's room for negotiation about who pays for what. For buyers, closing costs typically range from 2% to 6% of the home's total purchase price. For conventional loans, Rocket Mortgage prefers a minimum credit score of 620, although borrowers with a 760 will typically get the best rates. FHA loans are backed by the U.S. Department of Housing and Urban Development, so they have more flexible credit requirements. If you have a down payment of at least 10%, you only need a 500 FICO score for approval. If you have a 580 or better, you can get approved with just 3.5% down. Money matters — so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox. Sign up here. At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every mortgage review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of mortgage products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties and we pride ourselves on our journalistic standards and ethics.
Yahoo
05-04-2025
- Business
- Yahoo
Rocket Companies (NYSE:RKT) Climbs 40% Over Last Quarter Following Special Dividend Announcement
Rocket Companies recently announced plans to acquire Mr. Cooper Group and Redfin, alongside a special dividend and corporate governance changes, which have collectively contributed to a 40% rise in the company's share price over the last quarter. These developments underscore a focus on expansion and shareholder returns, aligning with an impressive financial recovery, including a substantial rise in earnings for Q4 2024. This performance stands out amid broader market declines, with major indexes experiencing sharp downturns due to tariff-related concerns, highlighting Rocket Companies' relative resilience in a volatile environment. Buy, Hold or Sell Rocket Companies? View our complete analysis and fair value estimate and you decide. AI is about to change healthcare. These 26 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early. Over the past three years, Rocket Companies saw a total shareholder return of 67.77%, reflecting its ongoing transformation and market adaptability. This performance was underpinned by several significant developments, including the appointment of Varun Krishna as CEO in September 2023, which has since provided new leadership direction. The completion of a share buyback of approximately 32 million shares further demonstrated a commitment to returning value to shareholders. Technological advancement, such as the appointment of a Chief Technology Officer in May 2024 to lead AI-driven product development, underscored the company's dedication to enhancing operational efficiency. Additionally, the strategic launch of the Rocket Visa Signature Card in March 2023 aimed to diversify revenue streams by integrating consumer finance offerings. Rocket's recent financial recovery is evident in its Q4 2024 earnings, which reported revenue of US$1.77 billion compared to significantly lower figures the previous year. A special dividend announcement of US$0.80 per share in March 2025 also highlighted efforts to deliver shareholder value. Over the past year, Rocket Companies' returns aligned with the broader US Diversified Financial industry at a time when their Q3 2024 results did encounter fluctuating metrics, including a net income swing from loss to profit by the end of the year. This adaptability and resilience amid evolving market dynamics have positioned Rocket favorably against broader market benchmarks. Learn about Rocket Companies' future growth trajectory here. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include NYSE:RKT. Have feedback on this article? Concerned about the content? with us directly. Alternatively, email editorial-team@
