5 Questions To Ask Before Refinancing Student Loans
Students who have finished college and are struggling to make ends meet will often seek refinance loans to ease the strain on their personal budget. However, there are certain questions that need to be asking before refinance loans can be provided. By asking the following questions, you can obtain much needed student loan relief.
1. What Are The New Terms Of My Agreement?
When you receive refinance student loans, there are a wide range of options for you to choose from, all of which reduce the percentage of your personal budget that is dedicated to student loan relief. The most important decision you'll need to make is the length of your repayment term. Knowing how much you can pay now is also crucial, as well as knowing how much you can pay later. The shorter your term of repayment is, the lower your interest rate will be.
2. Variable or Fixed Interest Rate?
Those who seek student loan relief will need to decide whether they desire a variable interest rate or a fixed interest rate. Applicants have the option of switching from their current fixed rate to one that is variable and vice versa. While a fixed rate comes with a lot less risk, variable rates tend to be more problematic because of their dependence on current financial conditions that are beyond a person’s control.
3. What Are My Cosigner Options?
If an applicant has a low credit score or does not have sufficient income, they may require a cosigner in order to receive valuable student loan relief. On the other hand, there are others who offer refinance candidates with the opportunity to release their original cosigners from the loan arrangement. Being able to free up additional credit can make it much easier to establish a personal budget.
4. Are There Credit Score/Debt Requirements?
Obtaining a refinanced student loan means adhering to the requirements that have been put into place by the bank or financial institution that is responsible for providing it. In most instances, an applicant will need to have a credit score of at least 680 or higher to qualify, while some banks will require a score of at least 720. There are also debt to income ratio requirements that must be met, in addition a minimum monthly income.
5. Do You Provide Customer Support?
When you refinance a student loan and reduce the strain on your personal budget, you are establishing a new relationship that will exist for several years to come. As a result, it is imperative that you find out what level of customer support you are entitled to during the early stages of the process. Do some research about your loan provider before deciding to proceed.