Monday’s need-to-know money news

Today’s top story: 4 mental tricks to help you save more for retirement. Also in the news: How to boost your chances of getting a personal loan, answers to your HELOC questions, and how to get your finances in order before the new year.

4 Mental Tricks to Help You Save More for Retirement
Staying on the right path.

Boost Your Chances of Getting That Personal Loan
5 tips that could help your chances.

Answers for Your HELOC Questions in 10 Words or Less
Understanding your home equity line of credit.

Get Your Finances in Order Before the New Year
The clock is ticking.

Student loans may be better than home equity borrowing

Dear Liz: I am almost finished with my associate degree at my local community college and will be starting my undergraduate degree in January. I have been lucky enough to accrue no college debt so far but know I will when I start my bachelor’s degree. I am considering taking out a home equity loan to cover this cost, borrowing around $10,000. I got a great deal on my house and it continues to grow in value even with this economy. Your thoughts on this?

Answer: Home equity loans are actually more expensive than most federal student loans. Home equity loan rates for people with good credit range from 7% to 9% in many areas, while the current rate for direct, unsubsidized federal student loans is 5.41%. Furthermore, home equity loans aren’t as flexible and have fewer consumer protections than federal student loans.

You may initially get a lower rate on a home equity line of credit, but these variable-rate loans easily could get more expensive as interest rates rise.

Not only do federal student loans offer fixed rates, but they provide many affordable repayment options plus deferrals or forbearance if you should lose your job or run into other economic setbacks. You don’t have to demonstrate financial need to get federal student loans, although people with such needs can get subsidized loans with a lower interest rate. Your college’s financial aid office can help you apply.