If you have already gone through the process of refinancing your existing loans, then you might believe that you can't do it again. But that is simply not true. Refinancing your student loans is a process that can be performed as often as you may like.
Not only are you allowed to refinance your student loan more than once, but also many times your circumstances may be such that it might be beneficial for you to do so. It can help you save interest costs and get you a new repayment term which better fits your current budget.
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What is Refinancing all about?
Student Loan Refinancing provides you with the wonderful opportunity of replacing your existing loan with one that has better terms or a lower interest rate. There might be a slew of reasons for you to consider refinancing your loans but at the same time, there are also plenty of details that need to be looked at before you go ahead and do it.
If your aim is to reduce the overall debt that you will owe over time, or if you are currently struggling to complete your monthly payments, then refinancing might be of help to you.
Refinancing is a process through which the terms and interest rates, along with other features of your existing loans are reconsidered and restructured to meet your current financial situation. It allows you to save money on interests and make payments easier and more manageable. By cutting off a few percentages, you can save some amount throughout the duration of student loan debt repayment. However, one thing to be kept in mind is that your repayment period can also be extended due to refinancing and if you’re a federal student loanee, then refinancing your federal student loans will lead you to losing the wide range of benefits they offer.
How many times can you Refinance your Loans?
If you have made up your mind about refinancing your student loans, then you might be curious and wondering how often are you allowed to do it.
Not only are you allowed to refinance your loans a second time, but you also have the authority to refinance your loans multiple times after that as well and, if done smartly, you can even save some money in the process. You have the freedom to refinance with your existing lender or explore your options by looking at other lenders, the only catch being that you must be eligible to get a refinance from the new lender that you choose.
So now you might be wondering how often you can refinance your student loans.
Well, the answer varies from situation to situation, but if you discover a lender with a better rate, you can look into refinancing every few years. For example, it could be wise to refinance again after 24 months, when the hard credit check on your first refinancing loan drops off your credit report.
However, you must keep in mind that applying for refinancing too often can hurt your credit score and may cost you more money in the long-run. Also, be careful and make sure to assess that you aren’t refinancing to a new loan that will not benefit you long-term.
Benefits of Refinancing your Student Loans Multiple Times
The benefits you will get from refinancing student loans multiple times will vary depending upon your personal situation, current loan terms, and goals for refinancing. Here are some of the biggest benefits associated with refinancing a loan more than once.
Save on Interest Costs: Get a better interest rate than your current loan
Switch Interest Type: Switch from variable interest rate to fixed interest rate and vice versa.
Switch to More Beneficial Loan Terms: You can get terms that better suit your financial state.
Refinancing Allows You to Switch Loan Servicers: Switch to a lender with better benefits.
You Can Consolidate Your Student Loans: Consolidate multiple student loans while refinancing
Refinancing Allows You to Release a Cosigner: Release your CoSigner from the shared responsibility.
Downsides of Refinancing your Student Loans More Than Once
While refinancing multiple times has some clear advantages, there are also some potential downsides to consider.
You May Have to Pay Fees During the Refinancing Process: You may be charged with Prepayment penalties.
If You Refinance Federal Loans, You Will Lose Certain Benefits: You will lose the benefits of Federal Student Loans.
Your Credit Score Could Be Damaged: A credit check may be performed which stays on your credit history for 2 years.
You Could Cost Yourself Money in the Long Run: Extending Loan Terms during refinancing may cost you more money in the long run.
Parting Words of Advice
Refinancing again after having done it before may or may not be the best choice for you depending on your situation. There are a wide number of benefits that you can avail by refinancing again and it isn’t as uncommon of a practice as you may think. But, before you refinance again, it is advised that you research your available options and make an informed decision. Be sure to compare eligibility requirements, benefits being offered, interest rates and fees of different lenders.
You can check out the Best Companies to Refinance Your Student Loans to see our top choices and choose the one that best fits your needs.