President Biden recently announced $10,000 to $20,000 in federal loan forgiveness.
Refinancing student loans can help you lock in a lower or fixed interest rate.
With rates expected to continue rising, refinancing sooner may make sense.
Here’s everything you better know to get started with student loan refinancing.
It’s estimated that90%of the student loan debt held is in federal loans.
When you refinance a private loan, you’ll do so with another private lender.
You cannot refinance a private loan with a federal loan.
You should also check your eligibility for additional loan forgiveness programs likePublic Service Loan Forgivenessand theTeacher Loan Forgiveness Program.
What to consider before refinancing
1.
Work on improving your credit by paying down your debt and making your payments on time.
Kantrowitz suggests taking a look at refinancing minimum income thresholds, which usually hover around $30,000.
Your DTI ratio represents the debt you hold compared to the amount of money you earn.
To refinance your student loans you generally want to have a DTI of 50% or less.
Kantrowitz stresses that borrowers should consider monthly loan payments, total repayment terms and interest rates.
Based on the change from your current loan terms, you might decide if refinancing makes sense for you.
Prequalification requires asoft credit pull, so it won’t impact your credit score.
Keep in mind, prequalification does not guarantee loan approval or specific rates.
When you add a co-signer, they are taking on the loan responsibility with you.
to get to do so, see to it you meet the credit and consecutive on-time payments criteria.
First, begin shopping around with other student lenders.
