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Divorce brings about many challenges, one of which is figuring out how to finance your child’s college education. College tuition is a significant expense — approaching $40,000 per year, on average — and the financial dynamics between divorced parents can add complexity to an already difficult decision-making process.

Understanding your options, obligations, and available resources is crucial for ensuring your child’s educational future is secure. Here, we’ll explore how divorced parents can approach paying for college tuition, including understanding legal obligations, navigating financial aid, and collaborating together to achieve the best outcome for their child.

Understanding Legal Obligations for College Payment

It’s important to understand your legal obligations when it comes to paying for college, particularly in connection with child support and divorce decrees. It’s also important to note that the FAFSA® guidelines for divorced parents have changed. Rather than using the financial information of who the child lived with the most, the FAFSA will use the information from the parent who provided the most financial support. Let’s take a look.

Child Support and College Expenses

Divorce settlement agreements often address who will pay for college, which is separate from child support.

What exactly is child support? When parents get divorced, it’s common for the parent who does not have custody to pay child support, which usually translates to financial support for minor children. Parents can stop making child support payments when a child turns 18 and the child graduates from high school (unless the child is still in high school and cannot support themselves).

In some cases, one parent may also be required to pay for college, as well. Educational expenses typically get addressed during the divorce process, so you’ll know your exact responsibilities regarding your child’s college education. However, your obligation will depend on your state’s laws.

Some states may order divorced parents to help pay for college-related expenses, while others view them as conditional expenses. The following states allow courts to order non-custodial parents to help pay for college:

•   Alabama

•   Arizona

•   Colorado

•   Connecticut

•   Florida

•   Georgia

•   Hawaii

•   Illinois

•   Indiana

•   Iowa

•   Maryland

•   Massachusetts

•   Mississippi

•   Missouri

•   Montana

•   New Jersey

•   New York

•   North Dakota

•   Oregon

•   South Carolina

•   South Dakota

•   Utah

•   West Virginia

•   Washington

•   Washington, D.C.

Divorce Decrees and Education Provisions

A divorce decree refers to the legal paperwork that formalizes the end of a marriage and outlines the binding terms after a divorce. It outlines child support and other factors, including education provisions. A divorce decree should also identify who will pay for college preparation and college itself, which can include:

•   Standardized tests

•   Admission applications

•   College visits

•   Tuition

•   Room and board

•   Required college fees

For example, one parent may be required to pay for room and board, while the other parent may pay tuition. You may also want to consider an appropriate cap on these expenses, considering the rising costs of college and the length of time it can take students to complete their degrees.

Keep in mind, too, that parents are not required to pay for their child’s college education. College students can rely on cash savings, scholarships, and both federal and private student loans to cover the cost of college.

Recommended: Examining the Different Types of Student Loans

Strategies for Tuition Cost-Sharing Between Parents

Let’s take a look at some strategies for how to pay for college for divorced parents, from negotiating contributions to making proportional payments based on income.

Negotiating Contributions

It’s important to review your financial situation together, consider the resources each parent can draw from, and figure out which types of expenses to cover. It’s best to create a written plan using an attorney or mediator to outline how you’ll manage college costs. The financial situation of each party should dictate a customized plan.

It’s important to note that when splitting costs, you may not be able to divide costs right down the middle (though splitting it 50/50 might make sense if both parents have a similar income and educational values). For example, your ex may not agree on the necessity of studying abroad or expensive curtains for a dorm room. Since those expenses aren’t “necessary,” either the parent who wants to pay for them can, or the student can be responsible for paying for non-essential expenses on their own.

Proportional Payments Based on Income

Those undergoing divorce often agree to split college expenses based on income. If one partner has a significantly smaller income than the other, the income disparity may be taken into account. For example, if one parent makes 80% of the combined income, that parent would be responsible for 80% of college costs and expenses.

Maximizing Financial Aid Eligibility

To qualify for financial aid, students must fill out the Free Application for Federal Student Aid, or FAFSA. For divorced or separated parents, the FAFSA process may differ from that of married parents.

Reporting Divorced Parent Information

The FAFSA is a free application that students can use to apply for federal, state, and institutional aid. Every family should file the FAFSA, and how you fill it out depends on whether you and your ex live together or not.

You answer questions on the FAFSA about the parent who provided more financial support that year. If that parent has remarried, the stepparent’s financial information will also be required.

The parent’s income and assets are used to calculate the Student Aid Index (formerly the Expected Family Contribution), which determines the student’s eligibility for federal financial aid. The parent who provided the least financial support is not required to put their financial information on the FAFSA, but it may be needed for other financial aid applications, such as the CSS Profile, which some private colleges require.

If you’re divorced and live together, you’ll add “unmarried and both legal parents living together” and answer questions about both of them on the FAFSA. Note that if you are separated from your spouse but still live together, you’ll indicate your marital status as “married or remarried,” not “divorced or separated.”

Special Circumstances Considerations

If you get divorced during the middle of a school year, you may want to submit a special circumstances form through the financial aid office of the school your child attends. The financial aid office may take a divorce into consideration and readjust your child’s aid award due to your financial situation. Anytime you experience a change in income or assets, notify the admissions office immediately.

Loans and Financing Options for Divorced Parents

Even with financial aid, scholarships, and savings, many families find they still need additional funds to cover college costs. Several financing options are available to help bridge the gap, including:

•   Federal Parent PLUS Loans: Parent PLUS Loans are available to parents of dependent undergraduate students. They offer a fixed interest rate and flexible repayment options. However, they require a credit check, and parents are responsible for repayment.

•   Private Student Loans: These loans are offered by private lenders and can be used to pay for college costs not covered by financial aid. Interest rates and terms vary, and a cosigner may be required.

•   Home Equity Loans or Lines of Credit: If you own a home, you may be able to tap into your home’s equity to help pay for college. These loans often have lower interest rates than other types of loans, but they put your home at risk if you can’t repay.

•   Payment Plans: Many colleges offer payment plans that allow you to spread tuition payments over the course of the year. This can make payments more manageable without accruing interest.

Tax Implications and Benefits

Fortunately, there are tax benefits to paying for college, beginning with claiming your student as a dependent.

Claiming the Student as a Dependent

Claiming a student as a dependent can save you thousands on your taxes. You can claim a college student as a dependent on your tax return as long as the student is younger than you, under age 24, and a full-time student for at least five months of the year.

Education Tax Credits and Deductions

Worried you can’t afford a child’s college bills? Don’t forget that tax credits and other tax benefits can offset the qualified costs of college or career school (tuition, fees, books, supplies, equipment). These benefits include:

•   American Opportunity Credit: The American Opportunity Credit allows you to claim up to $2,500 per student per year for the first four years of school your child is in school.

•   Lifetime Learning Credit: The Lifetime Learning Credit allows you to claim up to $2,000 per student per year for tuition and fees, books, supplies, and equipment.

•   QTP/529 Plan: If you contribute to a QTP/529 plan to prepay or save for education expenses, you can withdraw the money you put in, tax-free.

•   IRA Withdrawals: If you take money from an individual retirement account (IRA), you owe federal income tax on the amount you withdraw, but not the withdrawal penalty.

Communicating and Collaborating with Your Ex

Effective communication with your ex-spouse is key to successfully navigating college financing. Even if your divorce was contentious, it’s important to set aside differences and focus on what’s best for your child. This includes discussing financial responsibilities, coordinating on financial aid applications, and agreeing on a plan for covering any remaining costs.

It’s also important to involve your child in discussions about financing their education. Be open about the costs, what you and your ex-spouse can contribute, and what they may need to cover through scholarships, work-study programs, or student loans. This helps set realistic expectations and encourages your child to take an active role in their financial future.

The Takeaway

Paying for college can be a daunting task for divorced parents, but with careful planning, communication, and collaboration, it’s possible to navigate the challenges successfully.

You should start by understanding the legal obligations and exploring all available financial aid options. Work together with your ex-spouse to create a plan that works for both of you, and involve your child in discussions about financing their education.

Options for paying for college as a divorced parent include splitting the cost with your ex based on each of your incomes, having your student apply for scholarships, and relying on both federal and private student loans.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

How is the expected family contribution calculated for divorced parents?

The expected family contribution (EFC) has been revamped to become the Student Aid Index (SAI) through the FAFSA Simplification Act. The SAI evaluates the financial resources that a student may contribute toward educational expenses. Because of the FAFSA Simplification Act, the parent who provided the most financial support during the year is the income that will be used to determine the SAI.

What if one parent refuses to pay for college?

Parents — married or divorced — are not obligated to pay for college. Child support might terminate when the child reaches the age of majority (such as 18 or 21), and students enrolled in a postsecondary educational institution might have to access financial support through college. Check with a family law attorney licensed in your state to give you guidance about who may be obligated to pay for college.

Can stepparents be required to pay for college tuition?

Stepparents are usually not required to financially support stepchildren, but in a few instances, family court may require a stepparent to pay financial support for a stepchild. Various factors may come into play, including the length of the marriage, relationship between stepparent and stepchild, existing financial support, and more.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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Buyers who learn how to negotiate house prices lay the foundation for a mutually acceptable deal. Whether you’re a first-time homebuyer or not, these strategies to negotiate home prices may help you score a property at the price that works best for you.

Why You Should Negotiate House Prices

While negotiating the price of a home as a buyer can seem intimidating, the benefits may make it worth overcoming the reluctance. For starters, negotiating lets the seller know you’re serious about the home. And if the asking price is higher than you feel comfortable with, negotiating can help you see if there is any wiggle room.

A successful negotiation gives you the opportunity to create a concise offer that you’re happy with and that helps you stay within your budget. It can feel great to get the house you want without putting yourself in a stressful financial situation.

Things to Know Before Negotiating Home Prices

Know Your Market

The market will dictate how much leverage you have to negotiate a home price. So start by determining whether it’s a hot seller’s market or a buyer’s market.

The power is typically in your hands if the number of homes for sale exceeds the number of willing buyers. Markets can vary from city to city and neighborhood to neighborhood. So check with your real estate professional to be certain what type of market you’re working with.

Know the Value of an Agent

Can you buy a house without a real estate agent? Sure, but it’s not a decision to make lightly.

Besides the fact that real estate agents know what’s reasonable for the current market conditions, they have valuable experience that can help you navigate offers and counteroffers. And because they aren’t emotionally attached to the outcome, they are better set up to get the best deal without making ​​excessive concessions.

But you don’t want to work with just any agent. You want to work with someone who is a buying and selling expert, has connections with other agents in the area, and is knowledgeable about the community you’re interested in.

Got your eye on a house for sale by owner? You can find a real estate agent or go it alone.

Recommended: Finding a Good Real Estate Agent When Buying a House

How Much Can You Negotiate on Average?

One of the best ways to get an idea of how much you can negotiate is to research the prices of “comps,” recently sold homes in your target area that are similar to the property you’re trying to buy.

A real estate agent will have access to market trends. But you can obtain the information yourself on sites like Zillow, Realtor.com, Redfin, and Trulia. If you’re moving from out of state, this guide to the cost of living by state can give you a sense of what housing expenses to expect. In a large state such as California, it’s helpful to consider the cost-of-living breakdown for individual cities.

Zillow also lists how long for-sale properties have been on the market, which can give you some insight into how negotiable a list price may be.

Unless you’re in a hot seller’s market, you may be able to offer 10% under the asking price and even ask the seller to pay closing costs or certain other concessions.

How to Negotiate a House Price as a Buyer

Once you have a sense of the market and an agent to help you negotiate, the next step is to get your finances in order so you’ll be in a strong position to negotiate. Sellers are apt to be most enthusiastic about buyers who have been preapproved, as opposed to prequalified, for a mortgage.

While both involve a lender taking a peek at your financial information, such as income, credit history, debts, and assets, preapproval involves an in-depth application and verification process. It signals sellers that you’re seriously pursuing mortgage loans, so it’s a great way to send your offer to the top of the pile.

If you already own a home, selling it ahead of time could also put you in a better position to negotiate: It means you won’t have to wait until your home is sold to go forward with the buying process.

This “chain-free” approach requires careful timing and possibly setting up a temporary living space. While it’s not feasible for everyone, it is an option to keep in mind if you’re hoping to increase your odds of success in a competitive market.

Recommended: How Long Does a Mortgage Preapproval Last?

Tips on Negotiating House Prices

Keep Your Cool

From the first time you walk through the home, it’s a good idea not to show all your cards by appearing overeager, even if you’re totally in love with the place. If you come across as desperate for the house, sellers may feel they can expect a higher offer from you.

Don’t be afraid to point out any drawbacks that give you pause, and give yourself time to shop around before you get serious about putting money on the table.

Get an Inspection

Found a property you love? While your mortgage lender might not require a home inspection — and while forgoing one may make your offer more appealing to the seller — it’s probably in your best interests to have one.

Without a home inspection, the only information you have about the house comes from what the seller is able (or willing) to disclose and what you observe during your tour. Home inspections can reveal hidden issues like cracks in the foundation or plumbing problems.

Along with helping you plan for unforeseen repair costs ahead of time, the inspection can also give you leverage to ask the sellers to knock down their price a bit, offer you a credit for closing costs, or fix the problem themselves. Your real estate agent can help you decide how to negotiate the house price after the inspection.

Put Your Offer in Writing

Many experts recommend putting your offer in writing and adding as much detail as possible. That way you avoid any disagreements on what was said and can negotiate on factors beyond price.

When competing against multiple offers on a house, buyers may waive one or all contingencies to sweeten their offer. Contingencies are simply conditions that must be met in order to close the deal.

An appraisal contingency can be an opportunity to negotiate the home price or back out if the property does not appraise at the price in the purchase contract.

A clear title contingency also gives the buyer a way out if liens or disputes are associated with the property.

And it can’t hurt to ask for help with closing costs.

Plead Your Case

In a competitive market, you might also consider adding a personalized letter to your offer. It might sound cheesy, but selling a home can be just as emotionally fraught as buying one. Describing why you love the house or how you imagine your family growing with the property can help your offer stand out from others, even if you aren’t the highest bidder.

Avoid offending a seller with a lowball offer, particularly if you’re negotiating in a seller’s market or purchasing a beloved property that’s been in the family for years. If you do decide to bid around 20 percent under the asking price, make sure you’re willing to walk away.

When it comes time to make an offer, consider not only the list price but closing costs and any repair or renovation expenses.

Knowing When to Walk Away From an Offer

Although you’ll generally hear back on (realistic) offers within a few business days, sellers aren’t legally obligated to respond to your offer at all. Including an expiration date in your offer will give you a firm calendar date on which you’ll know for a fact you didn’t get the home, which means you’ll be able to redirect your efforts.

Purchasing a home can take a long time. There’s no reason to waste your energy when it’s a lost cause.

A seller who responds to your offer but who isn’t inclined to move on the price of the house might be willing to instead make repairs that are needed and that are identified during the inspection of the property. And consider asking the seller to throw in items like furniture or play equipment that they might be planning to take with them. If they decline and you still don’t feel good about the price, it’s time to walk away.

The Takeaway

Negotiation is crucial in love and war, in a salary decision, between parents and toddlers, and in real estate. If you’re a buyer, the more you know about negotiating home prices, the better.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

How do you politely ask for a lower price?

Rely on your real estate agent to help you determine a good offer price. Then consider writing a personal letter to accompany the offer, addressing the seller by name if possible and conveying, in a friendly tone, a sincere message about what you like about the house or how you can imagine your family living there.

How much can you negotiate when buying a house?

How much you can negotiate depends on how “hot” the market is. In a competitive seller’s market you may not be able to negotiate at all. Rely on your real estate agent to guide you. A property that has been on the market for a long time may provide more opportunity for negotiation.

What is not a smart way to negotiate when buying a home?

Avoid making a very low initial offer — you risk offending the seller. And don’t criticize the seller’s taste by, say, pointing out that the kitchen decor isn’t to your liking. Finally, if you are preapproved for a mortgage that is greater than your offer price, don’t tip your hand; instead, ask your lender to tailor the preapproval letter to the amount you are offering.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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The monthly cost of a $150K mortgage will vary depending on the type of loan, the interest rate, and the length of the loan. Mortgage loan terms are typically either 15 years or 30 years. The monthly payments for a 15-year loan are significantly higher than those for a 30-year loan; however, the lifetime cost of a shorter loan term is usually lower because, overall, you will pay less interest.

There are also additional costs to consider, such as private mortgage insurance (PMI) charged on some loans, condo or HOA fees, and any hazard insurance that may be required because of the location of the home. Here’s a look at how much a $150,000 mortgage might cost per month for a 15-year and 30-year loan term.

Total Cost of a $150K Mortgage

A $150,000 30-year mortgage with a 6.00% interest rate costs around $900 a month. The same loan over 15 years costs around $1,266 a month. However, these are just estimates; the exact costs will depend on your loan’s term and other “hidden” costs.

The monthly payment includes the principal and interest, but if you’re a a first-time buyer, you may not realize that escrow, taxes, and insurance might be additional line items. There are also upfront costs, or closing costs, that are paid when the purchase is initially finalized.

Upfront Costs

Upfront costs are the costs you pay once your offer on a home has been accepted. They are typically called closing costs, and some of them might be covered by your down payment.

Earnest Money

Also known as a good faith deposit, this is the money you put down to show the seller you are serious about buying their property. The amount will differ based on the price of the home.

Down Payment

Your down payment will likely be the biggest upfront cost you will have. The amount will vary depending on your lender, but typically it will be between 3% and 20% of the cost of the house. The more you can afford as a down payment, the lower your total loan will be, and the less you will have to pay each month in principal and interest. The following are the typical minimum down payments for the various types of home loans:

•   Conventional loan with mortgage insurance: 3%

•   Conventional loan without mortgage insurance: 20%

•   Federal Housing Administration loan: 3.5%

•   Veteran Affairs loan: 0%

•   U.S. Department of Agriculture loan: 0%

Closing Costs

The lender that makes your mortgage loan will charge administration fees, including the origination fee, underwriting fees, and application fees. You can also expect to pay taxes associated with transferring the title on the property, and you may need to pay for the cost of the home’s appraisal at the closing as well.

Bear in mind that your mortgage lender may want to see that you have enough money in your bank account to pay for at least two months of mortgage payments after paying closing costs and the down payment. This amount is called “reserves.” It’s not something that you will have to pay, but it is an amount you may need to show will be available to you after you have paid other expenses.

Long-Term Costs

The biggest long-term cost of buying a home is usually the monthly mortgage payment, which includes a portion of the principal (the amount you borrowed) plus the interest. Here are some other costs you can expect:

Property Taxes

The seller or their real estate agent should be able to give you a sense of what the annual property taxes will be on your new home, although taxes may change annually.

HOA, Condo, or Co-op Fees

Some homes are part of a condominium association, a co-op, or a Homeowners Association (HOA). Homeowners pay a monthly fee and receive benefits, such as grounds maintenance, use of a community center, or snow removal. These fees can range anywhere from $100 to $1,000 a month or more, depending on the association and location.

Home Upkeep

Home repair costs are highly variable but as a general rule you can expect to pay out around 1% of the home’s value each year for routine maintenance.

Insurance

You will of course need to insure your new home and its contents. You might also need to purchase hazard insurance if your area is at high risk for floods, earthquakes, wildfires, severe storms, or other natural disasters. The cost of hazard insurance can be between 0.25% to 0.33% of the home’s value for a year-long policy.

If you paid a smaller down payment, your mortgage lender may also require you to pay monthly private mortgage insurance (PMI) because you are considered a higher risk.

Recommended: Home Loan Help Center

Estimated Monthly Payments on a $150K Mortgage

The table below shows the estimated monthly payments for a $150,000 mortgage loan for both a 15-year and a 30-year loan with interest rates varying from 4% to 8%.

Interest rate	15-year term	30-year term
5%	$1,186	$805
5.50%	$1,226	$852
6.00%	$1,266	$899
6.50%	$1,307	$948
7.00%	$1,348	$998
7.50%	$1,391	$1,049
8.00%	$1,433	$1,101

How Much Interest Is Accrued on a $150K Mortgage?

The amount of interest you pay on a $150,000 mortgage will depend on the length of the loan and the interest rate. For a 15-year loan with a 6.00% interest rate, the interest would amount to around $77,841 over the life of the loan. For a 30-year loan with a 6.00% interest rate, the interest would amount to $173,755, which is more than double.

$150K Mortgage Amortization Breakdown

An amortization schedule for a mortgage loan tells you when your last payment will be. It also shows you how much of your monthly payment goes toward paying off the principal and how much goes toward paying off the interest. Most of your payment will be used to pay off the interest early on in the loan term.

Below is the mortgage amortization breakdown for a $150,000 mortgage with a 6.00% interest rate for a 30-year loan.

Year	Beginning balance	Interest paid	Principal paid	Ending balance
1	$150,000	$7,159.91	$1,473.61	$118,526.39
2	$118,526.39	$7,069.02	$1,564.50	$116,961.88
3	$116,961.88	$6,972.53	$1,661.00	$115,300.88
4	$115,300.88	$6,870.08	$1,763.45	$113,537.44
5	$113,537.44	$6,761.32	$1,872.21	$111,665.23
6	$111,665.23	$6,645.84	$1,987.68	$109,677.54
7	$109,677.54	$6,523.25	$2,110.28	$107,567.26
8	$107,567.26	$6,393.09	$2,240.44	$105,326.83
9	$105,326.83	$6,254.90	$2,378.62	$102,948.20
10	$102,948.20	$6,108.20	$2,525.33	$100,422.87
11	$100,422.87	$5,952.44	$2,681.09	$97,741.78
12	$97,741.78	$5,787.08	$2,846.45	$94,895.33
13	$94,895.33	$5,611.51	$3,022.02	$91,873.31
14	$91,873.31	$5,425.12	$3,208.41	$88,664.91
15	$88,664.91	$5,227.23	$3,406.29	$85,258.61
16	$85,258.61	$5,017.14	$3,616.39	$81,642.23
17	$81,642.23	$4,794.09	$3,839.44	$77,802.79
18	$77,802.79	$4,557.28	$4,076.25	$73,726.54
19	$73,726.54	$4,305.87	$4,327.66	$69,398.88
20	$69,398.88	$4,038.95	$4,594.58	$64,804.30
21	$64,804.30	$3,755.56	$4,877.96	$59,926.34
22	$59,926.34	$3,454.70	$5,178.83	$54,747.51
23	$54,747.51	$3,135.28	$5,498.24	$49,249.27
24	$49,249.27	$2,796.16	$5,837.36	$43,411.90
25	$43,411.90	$2,436.13	$6,197.40	$37,214.50
26	$37,214.50	$2,053.89	$6,579.64	$30,634.86
27	$30,634.86	$1,648.07	$6,985.46	$23,649.40
28	$23,649.40	$1,217.22	$7,416.31	$16,233.09
29	$16,233.09	$759.80	$7,873.73	$8,359.36
30	$8,359.36	$274.16	$8,359.36	$0.00

SoFi offers a mortgage calculator that shows the amortization of a property of any value and for any down payment or interest rate.

What Is Required to Get a $150K Mortgage?

Getting any mortgage usually requires both an adequate income and a large enough down payment. This home affordability calculator shows you how much of a mortgage you can afford based on your gross annual income, your monthly spending, your down payment, and the interest rate.

The Takeaway

The payments on a $150,000 mortgage will depend on the term of the loan and the interest rate. As a general rule, the shorter the term of the loan, the less interest you will pay over its lifespan.

In addition to your $150,000 mortgage payment, you can also expect to pay upfront closing costs and additional costs over the years that you are a homeowner. SoFi’s home loan help center has information and calculators that can help you decide what size of a mortgage you can afford considering the upfront and hidden costs. There are special considerations — and special mortgage assistance programs — if you are a first-time buyer.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

What will monthly payments be for a $150K mortgage?

Your monthly payment for a $150,000 mortgage will depend on the interest rate and the term of the loan. The payment for a $150,000 30-year mortgage with a 6.00% interest rate is approximately $900. The same loan over 15 years costs $1,266 each month.

How much do I need to earn to afford a $150K mortgage loan?

Assuming you go with a 30-year mortgage at an interest rate of 6.00%, you would need to earn about $50,000 a year in order to cover your mortgage plus insurance and property taxes. (As a general rule, lenders recommend these costs not exceed 28% of your gross earnings.)

How much down payment is required for a $150K mortgage loan?

The down payment you are expected to pay on a home depends on the lender. The more you pay upfront, the lower your loan amount and the lower your payments will be. Conventional wisdom says your down payment should be 20%. Some lenders will accept a down payment as low as 3%, but you may have to purchase private mortgage insurance.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOHL-Q225-004

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Mortgage rates have been generally on the rise for the last few years, from an average of less than 5.00% for a 30-year fixed-rate loan during most of April 2022 to 6.64% in early April 2025. But despite it being more expensive to borrow money for a home, refinancing is still an attractive option for many homeowners. It allows you to replace your current mortgage with a new, potentially more advantageous one.

Perhaps you decided that you’d like to change your loan term, or you received a windfall you’d like to put toward lowering your mortgage ASAP. Another possibility is that you’ve built up equity and would like to tap it in a cash-out refinance.

Whatever your situation may be, here’s what you need to know about refinancing a home mortgage loan, from whether it’s right for you to what steps are involved to how much it will cost.

What Is Mortgage Refinancing?

Mortgage refinancing occurs when you replace one home loan with a new one. You might do so for such reasons as:

•  To get a different loan term (say, 15 years instead of 30, or vice versa)

•  To get a better interest rate

•  To tap your home equity

•  To make a switch between a fixed- and adjustable-rate loan

•  To get rid of mortgage insurance on an FHA loan.

You need to go through the loan application process, underwriting, and closing again and pay the related costs. The new loan will pay off the old one. Then, going forward, you pay the new lender every month instead of your previous one.

Mortgage Refinancing Costs

Refinancing will generally cost from 2% to 5% of your loan’s principal value in closing costs. That’s a significant range, so it can be wise to shop around to make sure you’re getting the best deal.

Since you’re essentially applying for a new loan, you will likely need a chunk of cash at the ready if you choose to refinance. For this reason, it’s important to consider those refinancing costs compared to the potential savings. A good rule of thumb is to be certain you can recoup the cost of the refinance in two to three years — which means you shouldn’t have immediate plans to move.

There are helpful online calculators for determining approximate costs for a mortgage refinance. Of course, this will only be an estimate, and each lender will be different. As you do your research, lenders can provide final closing cost information alongside a quote for your new mortgage rate.

When you refinance, you also have to consider closing costs. Some lenders may not have origination fees, but instead charge the borrower a higher interest rate.

If you have a history of managing credit well and a strong financial position, there are some mortgage refinancing lenders that will probably reward you by offering a better rate than they would charge those with lesser credentials.

Recommended: Home Affordability Calculator

How Long Does a Mortgage Refinance Take?

The process can take anywhere from 30 to 45 days or longer to complete. Factors that impact timing include the complexity of the loan, your ability to submit materials in a timely fashion, and the efficiency of the lender and/or broker.

If you want the process to move quickly, you may want to look for mortgage lenders who offer more streamlined service and a better customer experience. This may mean working with an online lender versus, say, a brick-and-mortar bank.

How to Refinance a Home Mortgage Loan

When you refinance a home mortgage, you are essentially repeating the same process as when you originally bought your property. This time, however, instead of the loan going to the homeowner you are buying a house from, funds will first go to the financial institution that holds your current mortgage. Once that loan is paid off, your newly refinanced loan kicks in. You start making payments to the new lender.

Because you are replacing one mortgage with another, you can expect the steps to be similar to those you took when you got your original loan, from shopping around for the best loan for your situation to providing the necessary documentation to closing.

Steps in the Mortgage Refinancing Process

Here’s a closer look at the process:

1.   Determine your goal. The first (and arguably most important) step is to decide what you want to get out of your mortgage loan refinance. There are several mortgage refinance types, but “rate and term” and “cash-out” are the two most common.

Just as the name implies, a “rate and term” refinance updates the interest rate, the term (or duration) of the loan, or both. You can also switch between an adjustable- vs. a fixed-rate loan.

It is important to understand that not every refinance will save you money on interest. For example, if you extend the loan term from 15 to 30 years, you may lower your monthly payment, but you could end up paying more money in interest over the course of your loan.

Once you decide on your goal, your primary focus will be determining whether the fees are worth what you’ll gain.

With a cash-out refinance, you are using increased equity in your home to take out additional money on your mortgage.

This is usually done to fund common home repairs or pay off other, higher-interest debt. While this kind of loan can be an excellent tool if you use it wisely, as with all loans, it’s rarely advisable to take out more than you absolutely need.

2.   Check your credit score and credit history for errors. Your credit score is an important factor in determining the rate you’re offered. Make sure you take time to clear up anything that’s been reported erroneously on your credit report. You might also want to remedy, say, an unpaid bill that was forwarded to a collection agency. These are factors that can lower your score.

3.   Research your home’s approximate value. Check comparable sale prices — not just listing prices — in your neighborhood to get an idea of what your house is worth. If the value of your home has gone up significantly and improves your loan-to-value ratio (LTV), this will be helpful in securing the best refinancing rate.

4.   Compare refinance rates online. It’s wise to shop around and see what at least a few lenders offer. Don’t forget to ask about all costs involved. Most financial institutions should be able to give you an estimate, but the accuracy can depend on how well you know your credit score and LTV ratio.

5.   Get your paperwork together. The process will move faster if you have your pay stubs, bank statements, tax filings, and other pertinent financial information ready to go.

6.   Have cash on hand. Refinancing brings charges, and at closing, such items as overdue property taxes might need to be paid, too. Make sure you can cover these costs.

7.   Track the lender’s progress. Once the process is underway, keep an eye on how well things are moving ahead. What typically happens: The lender will likely send an appraiser for a home inspection. After the loan documentation and appraisal are submitted, loan officers determine the interest rate and create the loan closing documents. The closing is then scheduled with the refinancing company, mortgage broker, and your attorney.

Reasons to Refinance

As mentioned above, there are several typical reasons to refinance:

•  Reducing your monthly payment

•  Paying off your loan sooner

•  Changing the loan terms or type (fixed- vs. adjustable-rate)

•  Tapping your home equity

•  Eliminating mortgage insurance on an FHA loan.

Benefits of Refinancing

By refinancing your home loan, your monthly mortgage payments might be reduced. This in turn could free up money in your budget to go toward other goals, like paying down credit card debt or pumping up your emergency fund.

Alternatively, you might pay off your loan sooner, which could save you a considerable amount in interest over the life of the loan.

Refinancing your mortgage might also allow you to tap equity in your home. This could be useful if, say, you need those funds for educational or other expenses coming your way.

Also, some people who switch from an adjustable- to a fixed-rate loan may feel more secure with a set, unwavering payment schedule.

Recommended: First-Time Homebuyer Programs

Tips to Refinance a Mortgage

Beyond the tips mentioned above, you may also benefit from keeping these points in mind:

•  Think carefully about no-closing-cost loans. Yes, not paying closing costs can sound appealing, but there’s a good chance you will wind up with a higher interest rate and pay more over the life of the loan.

•  Make your appraisal a success. It can be distressing to have an appraisal come in low and throw a wrench into the works as you try to refinance. If there’s a glaring issue (rotting porch posts, for instance), it might be wise to fix it before the appraiser visits.

•  Prioritize requests for paperwork and documentation when your file is moving through underwriting. Not doing so can cause the process to drag on for longer than anyone might want.

The Takeaway

Depending on your financial situation and goals, refinancing your home loan can be a smart move. You may be able to lower your monthly payments, or you might shorten your loan term, thereby saving a considerable amount in interest. Another reason to refinance: To tap the equity you have built up in your home and use that cash elsewhere. The process is very similar to the one you followed when shopping for, applying for, and closing on your current mortgage. It will involve doing your research, providing documentation, and paying closing costs.

SoFi can help you save money when you refinance your mortgage. Plus, we make sure the process is as stress-free and transparent as possible. SoFi offers competitive fixed rates on a traditional mortgage refinance or cash-out refinance.

A new mortgage refinance could be a game changer for your finances.

FAQ

What is the average refinance fee?

Typically, you can expect to pay between 2% to 5% of the loan’s principal in closing costs when refinancing a mortgage.

Is it expensive to refinance?

The cost of refinancing will typically vary with the amount of the loan you are seeking. If closing costs are, say, 3.5% of the loan principal, that will be $3,500 on a $100,000 loan and $35,000 on a $1,000,000 loan. It can also be helpful to compare these closing costs to the benefits of refinancing. For instance, you might free up more money every month to pay down pricey credit card debt, or you might shorten your loan term and pay less interest over the life of the loan when refinancing.

Why is it so expensive to refinance a mortgage?

When you refinance a loan, you are replacing your current loan with a new one. Closing costs are assessed to cover the expenses involved, including appraisal fees and other charges.

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SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

SOHL-Q225-021

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