Loans can hang around like a dead weight, and it’s difficult to know the best way to cut them down. Refinancing is an option for several kinds of loans, and can offer you the tools you need to reduce your debt. Whether you’re dealing with a mortgage or student loans, follow these tips if you’re considering refinancing.
- Be Prepared – Before you even think of refinancing or altering your loans in any way, make sure you know your own situation. What’s your credit score? Has it changed since you first got the loans? What is your goal when refinancing your loans – a lower monthly payment or a lower overall amount?
Have these numbers clearly set in your mind as you set out so that you don’t get distracted by the first promising plan.
- Know the Consequences – Refinancing means that you are renegotiating your entire loan. This means your loan term starts over. This isn’t an issue for certain kinds of loans, but for others, it’s a problem. Student loans, in particular, are thorny, since refinancing can result in losing out on the potential of loan forgiveness or qualifying for income-based payment plans. Make sure you know the ripple effects refinancing will have.
- Use Your Assets – A cash-out refinance allows you to use equity you’ve acquired as cash so that you can pay off other debts. It will increase your mortgage, but it can allow you to pay off other loans with higher interests, like credit card debt or auto loans. You could end up paying far less overall. If one particular loan is causing you grief, this could be a good option to get it taken care of while only adding a little to your mortgage.
Make Your Debt Fit Your Life
Refinancing can be a great way to rid yourself of cumbersome debt, and Scient Federal Credit Union is here to work with you. If you’re interested in lessening your loans, call us today at 877 860 6928.