There are many benefits of student loan refinancing. You can save some money from this student loan, shorten your loan term, reduce the number of debt, and even lower your interest rate.
Do you want to merge some or all payments of your student loan for one?
Refinancing is right for many situations; however, it’s not suitable for everyone. You should also have to make a budget plan to stay on top of your student loans and get your money in order. Here are the pros and cons of student loan refinancing to see if it’s the right fit for you.
Student loan refinancing benefits
Getting interest rate lowered
Some significant benefits of student loan refinancing are that you have an opportunity of getting your interest rate lowered. Many private lenders give you an interest rate based on your credit score, income, and credit history if you have a good or excellent score in your credit history or score. Then there is a high chance for you to get a low-interest rate when you refinance. When refinancing, always be sure to get a fixed rate. The variable rate may look good in the beginning but can skyrocket over time.
Earnest helps you to easily manage your student loans:
With payment flexibility, no fees, and smart design, we are a loan servicer focused on you.
• Consolidate your private and federal loans
• Choose your preferred payment amount based on your budget
• Skip a payment and make it up later
• Select autopay to never miss a loan payment
• Select biweekly or monthly payments
• Increase payment anytime to pay off loan faster
• Make extra or early payments without prepayment penalties
• Adjust your payment date anytime with ease
Unite loan into a monthly payment
Another massive benefit of refinancing your student loan is that you can combine your monthly payment into one. Combining student loans through refinancing and consolidation can help the loan get paid quickly, save some money, and be less individual payments to keep track of each month. Many lenders can help you simplify your borrowed money payment.
Cosigner removing or adding advantage
With the help of refinancing your student loan, you have the benefit of removing or adding a cosigner on your first student loan. That includes removing your cosigners, such as parents, from your loan. Refinancing also applies to parent PLUS loans as it can remove the burden on them.
If your income or credit history is not sufficient, then adding a co-signer can help you get a lower interest rate and increase your chance of gaining success for student loan refinancing.
Also, consider refinancing a loan if your current loan doesn’t have a cosigner release option. Refinancing with Earnest means the cosigner will no longer have this loan, impacting their debt-to-income ratio.
Shorten your loan terms
When you refinance, you can adjust your loan terms according to your needs. You can arrange your loan term for 7, 15, or even 20 years for repayment. If you choose to pay your loan for the full loan term, it will cost you more interest rate. However, if you shorten your loan term, it will help you get a better interest rate. It will also help you to pay off your loan quickly! Keep in mind that having a shortened loan term will cost you less interest and will be paid off quicker.
When Is The Best Time To Refinance?
The sooner you refinance loans, the more you could save. The longer you hold your loan at a higher rate, the more interest you are accruing. This is depending on your loan type, even if you are in a grace period. That being said, you must be employed with specific income requirements to be eligible to refinance your existing loans with Earnest. The more your financial situation has improved since you took out the original loans, the better your refinancing loan rates will be.
Less Danger of Student Loan Default
Having long term payment debt can be overwhelming for everyone. That’s why refinancing helps you to pay it with only one monthly payment. Combining many loans into one because of refinancing will help it to get off and not going into default.
Will Refinancing Harm My Credit?
Refinancing student loans generally does not hurt your credit. When you get your initial rate estimate, all that’s required is a ’soft credit inquiry,’ which doesn’t affect your credit score. Once you determine which lender (bank, credit union, or online lender) has the best offer, you’ll complete a full application. This application does require a ‘hard credit inquiry,’ which can have a minor credit impact (typically a few points).
In the months and years after refinancing, your credit score should see steady improvement as you make on-time payments and pay down your student debt. You can set up an automatic payment through our Auto Pay loan program to ensure you never miss a loan payment.
Refinancing can help you in many ways as it has many benefits. There is a high chance that you will easily qualify for refinancing which will lead to a lowered interest rate.
CLIENT WELCOME BONUS DISCLAIMER Terms and conditions apply. To qualify for this signup bonus offer: 1) you must submit a completed student loan refinancing application through https://freedominabudget.com/earnest; 2) you must provide a valid email address and a valid checking account number during the application process, and 3) your loan must be fully disbursed. Bonus will be automatically transmitted to your checking account after the final disbursement. Limit one bonus per borrower. This offer is not valid with any other bonus offers received from Earnest. Bonus program available to legal residents of the United States of America (excluding Massachusetts, Michigan, and Kentucky).