Have a student loan? This loan may be the second biggest loan in your life, second to a home. Therefore, the interest on that big loan could be making you pay more than you really need to. Maybe you want to refinance it for a lower interest rate? Perhaps you have taken on a new job with an increase in salary. Can you refinance a loan?
It is possible to refinance a loan multiple times. That increase in pay and lowered interest rates can be wise reasons to refinance.
However, you have to consider before taking that giant step. How often can you refinance your student loan?
This is how student loan refinancing works.
Should You Refinance Your Student Loan?
Understand why you want to refinance your student loan. A lower interest rate can help save you money in the long run. If you continue to make higher payments, that will save you money in the long run. As per the experts at Lantern by SoFi, “If you refinance multiple student loans, rather than having to keep track of different interest rates and payment dates, you have just one monthly loan payment.”
But, if your student loan payments are not manageable, refinancing is certainly an option.
However, even at a lower interest rate, if your payments are lower, it means you will end up paying for a longer duration. This also means you will pay more money in the long run.
Consider the long-term consequences of refinancing that loan.
How Many Times Can You Refinance Your Student Loans?
Is there a limit to the number of times you can refinance your student loan? No. You refinance as many times as you wish.
In order to make this work for you, you need a well-paying, steady job, as well as good credit.
However, doing this too many times can ultimately hurt your credit. There are some criteria to consider before you refinance multiple times.
Before You Refinance Your Student Loan
- Interest Rate: The interest rate should be worth refinancing your loan. Because refinancing takes a hit on your credit, being selective will save you money in the long run. In addition, sometimes, your interest rate can go up. An ideal interest rate is below 10 percent.
- Check Your Finances: Always make sure your debt to income ratio is minimal. That means keeping your credit cards paid off. Also, consider new payments such as a car payment. These factors could give you enough debt to not make refinancing worth it.
- Credit Report: Carefully review your credit report. Look for missed payments or any inaccuracies.
- Penalty Fine Print: Always read through the entirety of your loan. The fine print will reveal fees like origination fees that could make a refinance ineffective. Pre-payment fees are not allowed, but some lenders will try to sneak those in.
The main purpose of refinancing your student loan is to put you in a financially better position than you were when you were a student. This should enhance your financial well-being. Moreover, this should help start you on the path to good fiscal health.