This website has already discussed how you should refinance your student loans to improve your student debt situation. Indeed, refinancing your student loans can lower your monthly payment amount, decrease the amount of interest you pay over the life of the debt, and has many other benefits as well. In addition, this website has also discussed the types of people who would benefit the most from refinancing their student loans, and these individuals should definitely do their research about student loan refinancing options.
It might seem like there is no rush to make a decision on whether to refinance one’s student loans. And it is true that repaying student loans is definitely a marathon and not a sprint. Even after refinancing student loans, most borrowers must still repay their student loans for years to come. However, there are several reasons why individuals should refinance their student loans now rather than wait months or years to refinance their student debt.
As many people might already know, interest rates are currently on the rise. Over the past several years, interest rates have been at some of the lowest levels in recent memory, and this provided many benefits to borrowers of all kinds of debt. One of the reasons why interest rates were so low, was to stimulate the economy during the recovery from the Great Recession. Of course, when it is easier for individuals and companies to borrow money, there is additional economic activity that benefits the economy.
However, interest rates are currently on the rise. The Fed has raised interest rates several times recently, and it is likely that the Fed will raise interest rates even further in the coming months. This has affected all types of debt, including mortgages. Indeed, when I applied for a mortgage a few months ago, I thought I would be able to obtain a very favorable interest rate. However, over the course of several weeks, mortgage interest rates increased precipitously, and I was not able to lock in a rate that was as favorable as I previously thought I would be able to obtain.
It is possible that higher interest rates in the market at large will affect the interest rates offered by student loan refinancing companies. Of course, borrowers want to obtain the lowest interest rate they can, but it might not be possible to score a really low interest rate when refinancing student loans in the future. As a result, if you are thinking about refinancing your student loans, you should make a move, and complete the refinancing process as soon as you can. It is likely that you will get the best interest rate possible in the near term, and if you wait to refinance your student loans, you might not be able to score a favorable interest rate.
Another reason why it makes sense to refinance student loans as soon as possible is since you do not want to waste money on higher interest rates for any longer than necessary. As has been discussed in prior articles, most student debt borrowers have insanely high interest rates. This means that in addition to repaying principal on student loans, borrowers must also pay an unreasonable amount of interest.
However, after refinancing student loans, it is likely that you will have an interest rate that is at least a few percentage points lower than the interest rates most borrowers currently have. As a result, you could save a lot of money by refinancing your student loans.
Nevertheless, if you wait months or even years before refinancing, you will not be able to benefit from lower interest rates earlier in your student loan journey. And accordingly, you will be repaying more money in interest than necessary. As I mentioned before, I did not refinance my student loans during my student debt repayment saga. Refinancing was not as popular when I first started repaying my student loans, and by the time I became educated about refinancing, I did not have much student debt left. However, if I had refinanced my student loans earlier, I could have saved thousands of dollars, since I would have owed less money in interest. All told, you should not make the same mistake I made, and should refinance your student loans as soon as you can.
There are many things you should keep in mind when choosing a refinancing company to work with, and future articles will discuss some of the factors you should consider when selecting a refinancing company. However, Student Debt Diaries recommends that our readers refinance their student loans with Splash Financial. In addition, if you refinance your student loans through the link above, you may receive a generous welcome bonus and we may receive an incentive as well. Of course, it does not cost you anything to do research, so we suggest that our readers look into Splash through the link above.
All told, refinancing is a big step in your student debt story, and it might be hard to make the decision to finally refinance your student loans. However, interest rates could soon go up, and if you want to receive the best interest rates possible you should apply for refinancing as soon as you can. In addition, if you wait before refinancing, you will be missing out on lowering the amount of interest you need to pay over the life of your student loans.