If you have been thinking of refinancing federal student loans, there are some things you should know about refinancing. Before you refinance federal student loans, make sure you understand the conditions of the loan, and exactly how it will affect your payments. Refinancing is also a great way to combine multiple loans into one, lower monthly payment. The key to getting a good deal on a refinance is shopping around, because you will be competing with other people with the same goal in mind. Here are some tips for finding the best deal on refinancing federal student loans.
The first thing you need to know is that there are basically two types of refinance programs for federal and private student loans. There is the direct refinance, which is the lowest interest rate, but it comes with the highest interest charges. You also have the balloon refinance, which has the lowest interest rate and lowest overall cost. It offers more flexibility, but the biggest drawback is that you pay the lowest overall cost. In addition, if you refinance federal student loans and consolidate them with another loan, you could end up with a much larger payment.
One option for reducing the cost of your payments is to refinance only the interest portion of your loan. This is a good option for students with good grades who have well performed but low credit scores. By paying just the interest rate instead of the entire amount of interest, you will significantly lower your monthly payment.
The second thing you should know is that you cannot refinance federal student loans that were taken out by your parents. If you have done this, you can still refinance federal government debt. The only exception to this is that you may be able to consolidate your government debts with a private lender. Many parents choose to do this to allow their children to get a better interest rate on their loans. However, if you refinance federal government debt, you must first secure an unrelated federal Stafford loan to consolidate with.
If you do not qualify for a refinance on the original loan, the other option is to consolidate all your loans. You would combine the balances of all the loans you have, and then agree on a new interest rate. You can opt for a standard, fixed-rate, or a variable-rate loan.
A standard refinance of a private student loans will cost you between six and seven percent. You will be asked to furnish financial information, such as income, employment history, and family members. The results will help you find a lender willing to offer you a reasonable refinance program. In addition, you need to note any other conditions imposed by lenders. For example, some private student loans will require an evaluation of your credit score before they will refinance you.
If you opt for a fixed-rate loan, you will be assigned a specific monthly loan amount. You have to repay the loan even if your circumstances change. However, you can choose to extend the loan term, depending on your financial situation. If you want to refinance federal government debt, you can talk to a federal representative or your agency’s loan office.
If you have good credit, there are no reasons why you cannot refinance federal and private student loans. If you have bad credit, however, you may still be able to refinance federal government debt. You will have to pay higher fees and interest rates. However, you can learn more about your options for refinancing private and federal student loans by registering for a free mortgage guidebook.