Should You Refinance Your Student Loans?
Refinancing your loans is a big decision to make, and there are a number of factors that will determine if you should or even can qualify to do so. Typically speaking, eligible applicants will have graduated, have a credit score in good standing, and lastly, a debt-to-income ratio that will allow for these additional monthly expenses in order to qualify. If you meet these requirements, consider refinancing your student loans with Unity Catholic FCU.
● Every Penny Counts: While a higher credit score will generally secure you a better rate, it’s not necessary to wait until you have perfect credit to refinance. Every penny you can save counts, and as long as you can qualify for a better rate than you have now, there’s no reason to wait. You can always apply again at a later date.
Private Student Loans: Considering that private student loans are not eligible for federal loan programs, such as income-driven repayment or loan forgiveness, there is no harm in refinancing. In these instances, all you can do is save money.
High Variable Rates: It can be difficult to predict payments with a variable rate loan, and even loans with low variable rates can get more expensive to repay. Instead of waiting for your variable rate to increase, consider refinancing to lock in a fixed rate.
Improved Financial Standing: If your financial situation has improved since you first received your loan, you may now qualify for a better rate. The great thing about refinancing is you can do it as often as you want.
While there are plenty of opportune moments where it would be in your best interest to refinance, there are also cases where you can't or shouldn't refinance. One key deterrent from refinancing is federal student loans. Refinancing eliminates federal student loan relief options, government income-driven repayment programs, public service loan forgiveness, and teacher loan forgiveness. While you may qualify for a lower interest rate, this may not be your best long-term option. Refinancing can also cost you more in the long run. With a longer loan term, you may end up paying more in interest overall, even if you have a lower rate. If you have a manageable payment and rate, it may be in your best interest to stick with what you have. There are also a few instances where borrowers may not qualify for refinancing. For example, if you recently filed for bankruptcy. Often lenders will require that a set amount of time, generally between 4-10 years, must have passed since your bankruptcy, limiting your options. Another red flag for lenders, which may prevent you from refinancing, is a previously defaulted loan. Should you find a lender willing to take your loan, you will likely face a high-interest rate. Should you decide it's time for you to refinance, Unity Catholic Federal Credit Union can help you take control of your student loan debt. Let our team help you reduce your monthly payments and even help pay off your loans faster. Your financial future starts here!