But consolidation does not offer any financial benefits in terms of your interest rate or repayment terms.
Your new interest rate will be a weighted average of your existing loans, so payments on a consolidated loan will be close to the sum of payments on existing individual loans.
If you’re looking to get out from under your student loan debt, it’s important to think through any strategy that lowers your monthly payments.
This especially applies to the prospect of rolling your student loan debt into a mortgage.
Essentially what happens when you consolidate BANK is that all of your original loans are paid off by your lender and replaced with a single new loan with new terms.
STUDENT LOAN And you can often get a lower monthly payment 0, 10 YEARS, PRINCIPAL, INTEREST because you will have a longer repayment period— 0, 25 YEARS so there are some trade-offs to keep in mind.
When you consolidate your federal loans through the U. Department of Education’s Direct Consolidation Loan program, you can extend the loan term to make your monthly payments more affordable, but you won’t see a favorable change in your interest rate.
Since it’s a big financial decision with long-term implications on your finances, we’ve put together a little pros/cons list that you might find helpful.
Student loan consolidation can be a great option if you’re looking to simplify and lower your monthly payments, but there are other factors to consider, so be sure to do your homework.
This can be very attractive, particularly to those with sufficient home equity.
But before you sign on the dotted line of your new loan or refinancing agreement, make sure you know how debt reshuffling will affect your bottom line.