How to Refinance Student Loans
With the price of education skyrocketing these days, student loans can be an onerous burden when you’re just starting out. Refinancing your debts, and consolidating them into one low-interest loan might not only help make your month-to-month easier, it could help you save thousands of dollars over the life of the loan. We’ll show you how to do it. Do a financial assessment. It’s a good idea to know what you can do before you get started in the process. You may be refinancing simply to reduce your debt, or you may be refinancing because you are finding it hard to make the payments.
While it’s important to have a goal in either case, knowing how much you can actually afford will make all the difference when shopping for an effective loan consolidation.
Create a balance sheet totaling all of your sources of income, and all of your expenses. It’s a good idea to do this in great detail for an entire month, so that you have an accurate gauge of how much you’re spending versus how much you are bringing in.
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Request a current credit report. Before you go shopping for any sort of loan, know what your credit score is. The higher it is, the more bargaining power you have, so it’s important to maintain good credit.
If your credit is not as good as it could be, devote a few months to bringing it back up. The money you save in interest and fees, in the long run, will be well worth the effort.
Evaluate your loans. Federally-guaranteed student loans generally have lower interest rates than private loans. Balance the difference in the costs between consolidating all loans together versus consolidating only the private loans and keeping federally-funded loans separate.
Contact your current lender. The market for loans is very competitive these days, and after years of high unemployment, a borrower with a good credit history is a valuable asset.
If your credit is good, your lender may find value in either lowering your interest rate, or extending your loan period.
Contact a local bank. More and more people are moving away from the Big Banks, and finding a great deal of satisfaction in community banks and local credit unions.