George and Chris were pleased, but not surprised, when they recently learned that their FICO credit scores from all three credit reporting agencies ranged from 770 to 810 (on a scale of 300 to 850). The high scores reflect the couple’s commitment to paying their bills on time and not borrowing more than they can afford. Currently, the couple owes about $14,000 on two cars, at an average rate of 7%. That is their only debt other than the remaining balance of $63,000 on their 30- year fixed rate mortgage. The home was recently appraised at $150,000. While money has not been a major problem for George and Chris, they are concerned about how they will pay for college for their son, who will graduate from high school next June. The good news: He has been accepted to his top choice school.

The bad news: The school is out of state, and the cost of tuition and board is more than George and Chris had planned and saved for. The couple is also concerned because there have been rumors that Chris’ company may be laying off some of their workforce in the coming year. While Chris believes his job is safe, he can’t be 100% sure.

For the Apply paper, please answer:

Should George and Chris borrow against their home equity to pay off their car loan and pay for their son’s college?

2. If so, why, and which type of loan should they choose (lump-sum loan or line of credit)? If not, why not?