While it’s a sore subject, the fact remains: Millions of Americans have student loan debt. And, just as you would with a home mortgage, there are times when refinancing those loans makes sense. If you’ve decided the time is right for you, here are a few steps to take when refinancing your student loans.
Do Your Research
First and foremost, when you decide to refinance your loans, you need to put in the work to research what that process entails, which refinancing companies are the best, and what makes the most sense for you at the moment. In short, you should never opt for the first loan company you come across or randomly pick one of the countless letters you get from lenders. Instead, take the time to educate yourself about which lenders offer the best rates, which ones are highly rated, and which ones provide the specific benefits you are looking for.
Determine What You’re Looking For
When going through the research stage, there is a lot that you need to consider. For instance, are you looking to lower your monthly payment, or are you looking to lower your interest rate? What is your priority in refinancing? While going through your research, it’s best to have this information on hand so you can narrow your search to the best lender for your needs.
Now that you’ve decided which lenders make the most sense for you, narrow that list down even further to the ones that offer the best benefits. For example, if you are looking for a lower interest rate, decide which lender offers the best rates at the moment. When applying for a loan, you’ll go through a hard credit inquiry, so don’t be afraid to shop around until you find the rate and payment plan that makes the most sense for you.
Be Prepared With Financials
When you refinance any loan, you should have a strong hold of your finances. Student loans are no different; you’ll not only need to provide your income and total debt, but you’ll also need to be aware of your credit score. If your credit score isn’t great, maybe hold off on the refinance until you build it up so you can get the best rate and payment plan. Conversely, if you have good credit, see if you qualify for better interest rates.
Understand the Requirements
Applying for student loan refinancing is a process, and there are a lot of requirements you’ll need to meet to be eligible. For example, you’ll have to be current on your payments, be in generally good standing with your debt, and bring in enough income to sustain the loan payments. Sometimes, you’ll need a co-signer to qualify. If so, make sure you have someone on board, or take a little more time and build up your financial history to sustain a refinance on your own.
Refinancing your student loans can seem complicated, but it’s totally doable. If you’re looking into this process, follow these steps to ensure you end up with the best payment plan for your needs.