Student Loan Refinance has been one of the best options for borrowers to obtain lower monthly payments and lower interest rates. The problem is, refinancing can have a negative impact on your credit rating. Before you decide whether to refinance or not, be sure to weigh the pros and cons first. There are also different refinancing options that you can choose from depending on the type of student loan you have.
If you are planning to have a fixed-rate loan, there will be only one option for term extension. Your original loan term ends at the time when the new one starts. So if you want to extend your term, you will need to go through the whole process again.
If you are planning on a variable-rate loan, it means that you will have more flexibility in deciding your refinancing options. You can change your refinancing terms up to five years or more. However, the penalty for changing your term too often can be expensive. A variable student loan usually refinances each year and the longer you let your loan term drift, the higher your interest costs will be.
On the other hand, a fixed-rate loan might be more practical for you. It can help you budget and plan your finances better. There are no uncertainties involved because the end date is set. If you want to extend your term, you must pay your current rate. If you choose not to, then you are charged interest at the end of the term but it is lower than what you will end up paying if you refinance.
You may also wonder if you should consider a student loan if your goal is to buy a house someday. In this case, you might want to consider refinancing to help you pay off your mortgage quicker. If you have an adjustable rate mortgage, the loan term is uncertain. If rates rise one day, your monthly payments could go up as well. With a fixed-rate loan, you know you will be able to make your payments for years to come.
Before you do any refinancing, however, you should be absolutely sure you can repay your loan. Not only do you need to consider your long-term goals, but also your short-term ones. If you want to use your student loan proceeds to purchase a house in a few years, then you need to make sure you can meet that goal. You will be stuck paying interest for several years until you get your house. If you want to use your refinancing money to consolidate your loans, then you need to make sure you can qualify for a consolidation loan that has a longer term.
You can learn more about refinancing a student loan by doing a search on the internet. You will find a great deal of information on all kinds of student loan refinance programs. You can also talk with people who have already refinanced to get a better idea of what it takes to refinance a loan and make the best choice for your financial future. And of course, you can always talk with your lender.
You should not refinance your student loan unless you are certain that you can repay it easily. There are several good reasons to wait until the end of your loan term to refinance. First, if you can wait, you will save yourself hundreds of dollars in interest costs. Second, you will be able to pay down your loan quicker, which will help you get ahead in your career. And third, waiting to refinance your student loan will help you avoid late fees and penalties that could add up to hundreds of extra dollars per year.