Q: My wife and I will soon need money to pay for our son’s college expenses. We would either have to refinance our home using the equity that we have built up or take a loan from my Thrift Savings Plan account. The refinance would be at 4.25 percent over 20 years with approximately $2,000 in closing costs. The TSP loan would be at 2.875 percent for anywhere from one to five years for a $50 fee. What do you feel is the best option? Is the interest on the TSP loan deductible on my taxes?
A: It’s impossible to say which one will be the best choice. However, I’d be reluctant to refinance my primary residence because a default could mean foreclosure.