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If you’ve completed your college education and now you have student loan debt, you’re probably wondering if refinancing your student loans is worth it. This article shares with you new tips and strategies to help you with all of your student loan refinancing needs.
There are many things to consider when looking into whether or not to refinance your student loans.
There are many loan forgiveness options available. Some are available once a certain amount of time has passed without missing a payment. Some are dependent upon where you work, and what types of companies you work for. Some are dependent upon your income.
If you are eligible for loan forgiveness programs, refinancing could result in disqualification.
Qualifying for student loans requires a credit score of at least 650. It is also important to consider your debt to income ratio – even with excellent credit, if your debt is a significant portion of your income then you may not be able to qualify. If your credit is not in excellent shape, then qualifying for a student loan may be off the table for you. However, if you are able to find a co-signer, that can make up for a less than perfect credit score. Keep in mind that this is easier said than done. Co-signers have to be willing to take on the risk of the entire loan when they co-sign the documents. This can be a lot of ask, and some will not be willing.
Refinancing your student loans may not be the best option for you if the interest rate of the refinanced loan is not lower than your current loan rates. This can be difficult to calculate on your own, especially if there are multiple loans. Utilizing a good student loan calculator is essential. Crunching the numbers is an important part of making sure that you know what you are signing up for.
Another possible benefit of refinancing your student loans is the potential for shortening the term of the loan. This means your payment may not necessarily go down, but the amount of time required for you to pay the loan decreases.
This can be a very confusing process. Besides the interest rate, there are several other important things to consider. Are your loans privately funded, or are they federally funded? Is there a possibility of consolidation vs. refinancing? What is the term (or how long you must make payments on the loan)? How much of each of your monthly payments is going toward your principal? Refinancing is not worth it for you if your monthly payments or the term of your loan is not decreased.
Federal loans often have a grace period, where payments are not required to be made. If you are still within your grace period, then it is not a good time for you to refinance because you will lose that grace period. This time before payments are required is meant to give you some time to get your financial ducks in a row before you are required to make payments. Don’t give up that time if you do not have to.
Private loans do not typically have a grace period, so as long as refinancing your loans will lower your payment, or decrease the term of your loan, then it is a good idea to move forward.
The simple answer is when your student loan interest rates are going up. If your student loans are not fixed, rising interest rates can become quickly out of hand. If your rates are fixed, then rising interest rates is less of a concern for you. What matters most is calculating the numbers. Again, using a good student loan calculator is a very important part of the decision-making process. Remember that refinancing typically means bundling all of your loans, so if the interest rate of the refinance is not lower than the rate on the bulk of your loans, it is not going to be the best option for you.
The first and possibly most important step is deciding which company or bank to refinance your loans through. Ensuring that you are using a reputable lender will make your experience much smoother and can even result in lower rates. Some groups even offer incentives, including lowering interest rates, if you sign up for a paperless account or if you don’t miss payments.
Second, fill out the application and get a quote. Actually, fill out lots of applications and get lots of quotes. Shopping around for the best rates can end up saving you thousands of dollars.
Third, fill out the paperwork and accept the refinance option from the lender with the best quote. Sometimes, this means there may be a brief period of time where payments are suspended while the lender transfers the debt. Be sure to make note of when the first payment is required.
#1 Rated For Student Loan Refinancing
If you’re looking to lower your student loan debt costs then you should definitely look into LendKey. They offer the refinancing of existing student loans using your own local banks and credit unions. By leveraging their platform, they will find you the best terms and lowest rates possible. LendKey has been in service since 2007 and has funded over $3 billion in loans.
There are some things that could potentially mean that refinancing isn’t for you. We have already touched on them, but to review: consider your interest rates carefully, do you qualify (and if your credit score is low, will it actually save you money), income stability, and whether or not your loans possibly be forgiven. If the numbers don’t make sense, or if your income may not remain stable, then refinancing is probably not the best idea for you.
Refinancing your student loans is a big decision. There are many things to carefully consider. Interest rates, credit scores, loan terms, and accredited lenders are essential for you to understand before you refinance. Using a student loan calculator is extremely helpful in this process. Once you are sure whether or not refinancing is for you, you can take the steps necessary to move forward.
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