Subscribe to our mailing list

X

Should I Get a CommonBond Loan to Refinance My Student Loans?

By on November 7, 2017

Question:

Dear Steve,

I have been paying my private and federal student loans for about 7 years now. I’m just starting to see the glimmer of my interest rate dwindling. Not to mention, I now have a great credit score.

I have been approved for a 5.4% fixed interest rate 7-year refinance option through Common Bond without much difference in my monthly payment. This seems desirable seeing that my other payoff options don’t leave me debt-free until around 2031.

My question is about how interest rates are applied in this situation. If I am currently about to hit the point that nearly all of my payment applies to the principal, would it be dumb to start that over again by refinancing?

How does that work?

Emilee

Answer:

Dear Emilee,

You’d have to look at the interest rates you are paying on your current loans. It’s actually pretty easy to play around with the length of a loan and interest rates to hit a target monthly payment. If you had a higher interest rate all you have to do is extend out the length of the loan to get your smaller target monthly payment. However, doing that will cause you to spend more overall in interest in the longer loan.

The gamble you take by converting federal student loans to a refinanced private loan is you will lose access to the federal income based repayment plans that would be beneficial if you were to experience a reduction in income for any reason.

If that’s not a concern to you then selecting a 7 year repayment plan is up to you. With your current loans you could always send more than the minimum required each month to pay the current loans off early.

Based on what you’ve shared it sounds as if the CommonBond student loan consolidation offer would cost less money overall but you just have to be willing to take the risk on losing federal repayment options it does not appear you are using now.

READ  6 Student Loan Mistakes You're Going to Make

morehelp1
Choice1 Choice2 Choice3 Big Hug!
Get Out of Debt Guy - Twitter , G+ , Facebook
If you have a credit or debt question you'd like to ask just use the online form .

Last step, fill out the information below or call us for Priority Assistance.

What problems are you having with your report?

Your first name is required. Your first name is required to be at least 2 characters. Your first name cannot be longer than 50 characters.
Your last name is required. Your last name is required to be at least 2 characters. Your last name cannot be longer than 50 characters.
Your email is required.
Your phone is required. Your 10 digit phone number is required.
Your state is required.
Your age is required. Your age must be greater than 18. Your age must be less than 100.

By clicking on the "Contact Me" button above, you consent, acknowledge, and agree to the following: Our Terms of Use and Privacy Policy and to receive electronic communications. We take your privacy seriously. That you are providing express "written" consent for Debt.com or appropriate service provider(s) to call you (including through automated means; e.g. autodialing, text and pre-recorded messaging) via telephone, mobile device (including SMS and MMS - charges may apply), even if your telephone number is currently listed on any internal, corporate, state or federal Do-Not-Call list. Consent is not required as a condition to utilize Debt.com services and you are under no obligation to purchase anything.

By clicking on the “Contact me” button above, you consent, acknowledge, and agree to the following: (1)That you are providing express “written” consent for Lexington Law Firm, Debt.com or appropriate service provider(s) to call you (including through automated means; e.g. autodialing, text and pre-recorded messaging) via telephone, mobile device (including SMS and MMS – charges may apply), or dialed manually, at my residential or cellular number, even if your telephone number is currently listed on any internal, corporate, state or federal Do-Not-Call list; and (2)Lexington Law’s Privacy Policy and Terms of Use and Debt.com’s Terms of Use and Privacy Policy. Consent is not required as a condition to utilize Lexington Law or Debt.com services and you are under no obligation to purchase anything.

About Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

One Comment

  1. Emilee

    November 7, 2017 at 3:37 pm

    Question asked on student loan refinance with CommonBond.

Share a Comment / Leave a Reply

%d bloggers like this: