Tip Of The Month

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QUESTION:  I don't have much money in the bank and my son is just entering college. How can my home be used to help pay for college tuition?

ANSWER:  Let's assume you bought your house about ten years ago for $80,000 and have now reduced your mortgage to $40,000. Since home values rise, your house is now worth $140,000 which gives you an equity of about $100,000. On a conventional mortgage basis, a bank may loan you 80% of value, or $112,000. Thus after paying off your existing $40,000 loan you would come out with $72,000 cash, or nearly what you paid for your home 10 years ago.