If you are struggling with your student loans, refinancing can be a viable option. Refinancing can lead to lower interest rates, monthly payments, and favorable terms. However, refinancing isn’t a small decision and individuals should carefully assess if refinancing is the best strategy for handling their student loans.
If you are having a hard time making your monthly student loan payment, you should consider working with a skilled student loan lawyer. An experienced attorney can examine your personal finances and advise you on the best strategy for loan repayment. Here are some important things to consider when deciding whether or not to refinance your student loans.
What Interest Rates Are Available to You?
One of the main reasons people consider refinancing their student loans is to secure a lower interest rate. Therefore, before refinancing, it’s important to compare the interest rate on your current loan to the ones you would qualify for if you refinanced. If you have loans with a really high-interest rate, it’s likely you could significantly benefit from refinancing. However, if you have federal student loans with a low-interest rate, refinancing could mean losing all the benefits and repayment options associated with federal student loans.
What Monthly Payment Can You Afford?
Considering the monthly payment on various loan options is important. Low and high monthly payments have pros and cons, and determining the best option for you will depend on your financial situation. If you have a low income, high living costs, or a high balance, refinancing your loans to have a longer repayment period with lower monthly payments could be beneficial. Alternatively, if you have a good income, a shorter repayment term with higher monthly payments could help you pay off debt faster.
Ultimately, the best choice for you will depend on what you can afford. If you’re currently making extra payments on your student loans, it probably means refinancing to a shorter repayment period would save you more in the long run. However, if you’re struggling with your current payment schedule, refinancing to a longer repayment period is a good strategy.
What Options Are Available to You With Your Current Credit Score?
Your credit score and history will play a significant factor in your refinancing options. Most lenders will use a borrower’s credit score as a determining factor when deciding whether to approve or deny them for a student loan refinance application. As a borrower, this means looking over your credit history can help you gauge if your score is good enough to refinance your loans.
Graduates and students with good credit scores will have a much easier time refinancing their loans and qualifying for favorable terms and interest rates. Most lenders consider a “good credit score” to be a minimum of 650. Those with excellent credit scores—in the mid 700s or above—will have the most options and will be able to easily secure a low-interest rate. Many refinancing lenders will provide you with the option of a free “soft” credit check, allowing you to get a general idea of the interest rates you qualify for. This is favorable to a hard credit check, which has the potential to lower your score.
Contact a Skilled Student Loan Lawyer for Help Refinancing Your Loans
Taking the steps to refinance your student loans can be overwhelming. However, getting on top of your loans in a timely manner is the best way to prevent going into default and damaging your credit score. If you are struggling to figure out the best repayment plan for your situation, work with a skilled student loan debt lawyer.
At McCarthy Law, our attorneys are dedicated to helping students navigate the complexities of the student loan system. Under our student loan debt settlement program, our licensed attorneys negotiate with lenders to ensure our clients pay only a fraction of their original loan balance. To schedule a consultation with one of our skilled student loan settlement attorneys, call (855) 976-5777 or fill out our online contact form.