To make it easier for you, student loan refinancing is when a borrower makes a new loan with a lender that pays for previous student loans and gives new repayment requirement.
By doing this, you’ll get a new interest rate and your payments will be adjusted depending on the agreement you make with the lender.
To be good to go when it comes to student loan refinancing, you need to be a US citizen or a permanent resident, you need to have a credit score which is above 660. A job or offer of employment needs to make its appearance, too, because you need to have a minimum income. Also, you need to maintain a good standing when it comes to your current loans.
In case you’re not eligible for this and you don’t meet what’s expected for you, you might be in luck and get the refinancing anyways – it’s even better if you have federal student loans.
So why is it important to take a glance at the student loan refinancing program
Lowered interest rates
When it comes to college, there’s a possibility that you’ll take loans that will not necessarily in concordance with your future finances. After graduation, you’ll find out that you’ll be short on money, either because of the high fixed interest rates, or variable interest rates which are not so favorable.
For refinancing your loans, you’ll indeed have to be eligible, but you can get a loan with a lower interest rate than the one you have right now easily. And this can help you save up lots of money – we’re talking hundreds or even thousands of dollars. Are you now convinced that it’s a good option in the long-term for you?
How to get reduced payments
In case you have a federal or private loan, you’ll need to repay everything in 10-year time from the moment you graduate. Using refinancing, you’ll enjoy some additional time when it comes to repaying all your loans – which also means lower monthly payments.
Lower interest rates equal lower monthly payments, don’t forget that. So you’ll be happy to see a reduction in your payments from month to month, which will give you more pocket money to be spent wherever.
What refinancing your loans actually mean?
Even if some students rely on their parents or other co-signed sources, many of them still choose to have the support of other borrowers which will help them get a good interest rate and an approval for a loan. But keep in mind that after you finish college and get on your feet, you might need to let your co-signed sources go, because this obligation that they have towards you might affect their credit in some ways.
By getting refinancing, lenders will let you refinance your loans so that you can set the co-signer sources free, those who were parts of other student loans from the past – this gives you an interest rate which might be better. But to do this, you’ll have to accept some terms and conditions and you’ll have to be eligible for this. But hey, it helps you in making your own credit and your credit score will be higher, too.
