Many stocks and mutual funds have earned higher returns than the after-tax cost of home equity borrowing. No one can predict how a specific security will perform in the future. Dipping into retirement funds has shortcomings. Home equity financing does not require parents to file financial disclosure forms with the government or school, and there is no ceiling on the family's income or amount of interest paid to be able to deduct the full amount of interest. The application process for a home equity loan may even seem quicker and easier than registering for college classes.
Some lenders require less than three weeks to process applications and issue checks to customers.
Depending on the school's schedule, parents still have time to obtain home equity financing before the tuition bill is due. Applicants in all 50 states can receive conditional approval in 50 seconds or less, and most customers receive their loans in seven to 10 working days. To add to the customer's convenience, a notary may be sent to the customer's home to perform the loan closing. Because each family's finances differ, a family should analyze its own financial situation to determine its best options for a set of circumstances. Despite their tax and other advantages, only about 25 percent of homeowners hold home equity loans.