Twice a week, our CEO and resident money guru Jean Chatzky tackles your burning questions in the HerMoney newsletter. We’ve pulled some of the best to feature on our website — and this one made the cut! Got a question for Jean? Send it her way right here.
Q: I’m thinking about refinancing a private student loan. Right now, I’m being told I need a co-signer due to my debt-to-income ratio. Should I refinance, and if I do, what are the big things I need to be aware of as I go through the process?
A: Refinancing a private student loan can make sense if you qualify – either on your own or with a co-signer – for a lower fixed rate and favorable terms.
“A lower rate can reduce your monthly payment and total interest, but be sure to compare offers carefully, watching for fees, variable rates that can rise, or longer repayment terms that add cost,” shares Martha Kortiak Mert, Chief Operating Officer at Saving for College. A student loan refinancing calculator can help you estimate the impact on your monthly and total payments.
Because you’re refinancing a private loan, lenders will weigh your credit, income and debt-to-income ratio heavily. “Private lenders are likely to look for a debt-to-income ratio of under 50%, a minimum credit score of 650, and a steady job or consistent income,” she adds. “If you can’t yet qualify for a strong offer, it may be worth improving your credit or income before applying.”
MORE ON HERMONEY:
- How Much Should I Save For My Kid’s College Education? Here’s How To Figure It Out
- 5 Strategies To Start Repaying Your Student Loans And Become Debt-Free
- How To Navigate Retirement While Paying For College
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