Qualify for a mortgage by refinancing student loan debt

Qualify for a mortgage by refinancing student loan debt

refinancing student loan debt

Income-driven repayment options are available for federal student loans, extending loan maturities to 20 or 25 years. Lengthening your loan term can potentially raise the total interest you pay over the course of your loans if you don’t lower your interest rate.

By refinancing with a private lender, many borrowers might be eligible to have the interest rate on their student loans reduced. lenders vying for student debt refinancing on the Credible platform. The best offers will be made to borrowers with good credit who choose loans with shorter repayment durations.

The average rate reduction for borrowers who utilized Credible to refinance into a loan with a longer loan payback term was 1.36 percentage points, saving them $209 per month in student loan payments. Your mortgage borrowing limit will increase to about $340,000 if you can prequalify for a $300,000 house loan and then reduce your monthly student loan payment by $209.

mortgage by refinancing student loan debt

Remember that you will forfeit some borrower benefits including loan forgiveness and eligibility for income-driven repayment plans if you refinance federal student loan debt with a private lender. Make research.

Regardless matter whether you are a first-time home buyer or not, comparing mortgage rates can result in thousands of dollars in savings over the course of your loan. When evaluating home loan options, however, the interest rate is not the only factor to take into account. It’s crucial to take loan fees, credits, and charges into account.

Borrowers who anticipate staying in their house for a considerable amount of time will occasionally agree to pay “points” in return for a lower interest rate. However, bear in mind that it may take years to see the benefits of paying up front costs to reduce your interest rate. If you’re considering lowering your interest rate by adding points or fees, a mortgage calculator may help you determine how long it will take for your investment to pay off.

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