There is no one refinance rate that is considered good for all borrowers. Lenders offer borrowers personalized refinance rates based on their financial circumstances. A good refinance rate for you is any rate that’s lower than what you’re currently paying on your loans. The lower your interest rate, the higher your savings. Even an incremental decrease in the rate can make a considerable difference.
Refinancing involves paying off your existing, high-interest loans and taking on a new loan with new terms and a lower interest rate. The main purpose of refinancing is to get a loan with a lower rate of interest.
Interest rates on student loans are not fixed. They may increase or decrease depending on market conditions. Refinancing when market rates are down will allow you to benefit from the lower rates.
However, that’s not the only factor that goes into calculating refinance rates on student rates. Your financial circumstances also play a role in this calculation. Good credit, low debt to income ratio, and a steady income will help you get the lowest rate possible.
Yes, you can refinance both, federal as well as private student loans.
Should you refinance your federal and private student loans? That depends.
There is no major downside to refinancing private student loans. You should consider this option as soon as you qualify for a lower interest rate.
Refinancing federal student loans requires a little more thought. There is no federal loan refinancing through the government. It can only be done through private lenders and will convert all federal loans into private loans. This shouldn’t be a problem if you aren’t interested in pursuing forgiveness or other perks associated with your federal loans. If you wish to pursue any forgiveness program, it’s best to hold off on refinancing federal student loans.
You know that refinancing is the best way to lower the cost of your student loan debt. You also know that refinance rates are not set across the board. How you handle your finances will pay a major role in determining your interest rate. With that in mind, you should stay focused on building your financial credibility from day one.
One way to do this is by making sure to pay off all your debts within the due date every month. This will help to build your credit score steadily. A good score is a key factor lenders use in calculating your refinance rate.
Another thing you can do is look for ways to cut back on discretionary spending. At the same time look for ways to increase your monthly income. This will help lower your debt to income ratio, which is another factor that goes into calculating your refinance rate.
Doing these two things consistently will help you get the best refinance rate for you.
We hoped you enjoyed this article! Remember, you can compare your personalized rates with our lending partners and potentially lower your monthly student loan payments and save money.