Why am I refinancing?
What outcome do you expect in refinancing? The reason being an important question to ask yourself when choosing to refinance your loan. What are your motivators? Lower interest rates, reduction of monthly payments, get rid of the debt, etc. Answering the above questions will help in making the decision. Usiere Uko, a finance coach, highlights wy it is important for students to finance their loans.
Negotiate for lower interest rates
If you have a good credit score and a monthly income, then the risk of borrowing again reduces significantly. With the risk reduction, you can negotiate your interest rates lower as you are a weak peril debtor.
Interest on student loans varies depending on the type of loan. A private student loan usually has a higher interest rate than a federal student loan. Therefore, when you refinance your loan, you have an opportunity to renegotiate your interest rate and choose the best type of loan.
How much will you pay monthly?
How much you wilt remit monthly will depend on your income. The more you earn, the more you are capable of paying. Consider how much you have been paying previously and weigh your ease of payment was it easy to pay? If no you can request for lower deductions to ensure that you have a quiet repayment period.
Presence of a guarantor
In cases where the credit score is too low, the lender might require you to have a guarantor in the event of loan default. In other situations, you may be necessary to remove a cosigner from the initial loan. Refinancing gives you room for such amendment.
Many borrowers have recorded some dissatisfaction with the student loan servicing they currently have. Re-financing opens the door to changing banks and having an opportunity of getting better customer service. However, it is prudent to research of the available financial institutions in the market before making a move to avoid falling into the same exact pitfall.
Combining federal and private student loan
You have to ensure that you stand a chance of mixing the two types of loans. As the option to combine them was not always available. Nonetheless, some lenders agree to combine these two types of credit. Bring them together has the possibility of enabling you to get a low interest and be able to save some money. It is wise to do research on mostly private lenders who can agree to this combination before agreeing to refinance a student loan.