Just as a student loan can be very helpful, it can also be a hard nut to crack when its time for repayment. This mostly happens when you have no idea or plans on how to pay back. In other cases, the loan burden continuous even after graduation. Well, the solution to all of this is refinancing the loan.
Yes! refinancing. Refinancing allows students to replace their existing student loans with new loan, preferably with a lower interest rate. in this blog post we will be telling you all there is to know about how to refianace your student loan.
What Student Loan Refinancing
Before giving out the full guide on how to refinance a student loan, lets first of all, talk about what student loan refinancing really is. Student loan refinancing simply means the replacing of one or more existing loans with another loan, preferably from a private lender. However, in other to save up funds throughout the lending period, your need to go for loans with lower interest rate or shorter repayment time fram.
What are the Requirements to Refinance Student Loans?
Eligibility criteria for a student loan refianacing differ by lender but general requirements include:
A decent credit score (650 or higher),
A steady income,
A low debt-to-income ratio.
Some lenders may additionally need a minimum loan balance to qualify for refinancing.
Benefits of Refinancing student loan
Here are the pro of student loan refinancing:
Refinancing might help you save money by obtaining a lower interest rate than what you’re now paying on your loans
Lower monthly payment
Downside of Refinancing Student Loan
loss of income-driven repayment plan
loss of debt forgiveness program eligibility
Refinancing student loans can help you save money on repayment, but it’s not for everyone, especially if you have federal student loans that are eligible for debt forgiveness programs and income-driven repayment plans.
What do Lenders Look for when you Apply for a Refinance?
Credit History
Payment history
Income and debt levels.
Credit score
How to Refinance Student Loans in Seven Steps
Here are helpful guides:
Check Your Current Loans to know how much its worth
Next, check Your Credit Score
Research Lenders and get review about them
Prequalify with Multiple Lenders
Choose a Lender and Loan Terms you are comfortable with
Get the application form and fill it
Submit a Formal Application
Review and sign loan documents
Pay off existing loans
What do I Need to Refinance my Loan Good Credit Score
Stable income
Existing Loan Information
Employment History
Cosigner (if applicable)
Can refinanced student loans be forgiven?
Refinanced student loans cannot be forgiven by the federal government because you work in public service, have made payments for several years, or went to a sham school that’s closed its doors.
What is refinancing a student loan?
Student loan refinancing allows you to gather all or some of your loans into one new loan, often at a lower interest rate that may help you pay less over time or provide you with a longer repayment term that will lower your monthly payment.