Consolidating private loans federal loans

05-Feb-2018 17:05 by 3 Comments

Consolidating private loans federal loans

The largest potential downside when consolidating federal loans through a private lender is that you have to forfeit the repayment and forgiveness options exclusive to federal student loans.

When consolidating through the Department of Education, only federal loans can be consolidated in a Direct Consolidation Loan.

As the federal programs round the rate up to the nearest one-eighth percentage point, the rate will most likely be slightly higher than your current average interest rate.

Interest rates are fixed for the life of the federal consolidation loan.

Currently, it is a government sponsored enterprise whose main purpose is to ensure the availability of money for mortgage lenders so that affordable home ownership is possible for as many people as possible.

Only mortgage companies are supported by it; home loans are not offered by Fannie Mae.

Fixed interest rates currently range from 3.375% to 6.740% and will remain the same for the life of the loan just like the Federal Direct Consolidation Loans.

While variable rates offer the highest potential cost savings, it is still possible to get a lower fixed interest rate than your current average federal interest rate.

Fannie Mae was chartered in 1934 as an FHA insured mortgage organization.

It expanded into also including VA-backed mortgages after World War II.

In a nutshell, you will get the lowest rates when you choose the shortest repayment term (i.e. Variable rates will offer you the lowest interest rates as they currently range from 2.345% to 6.270%.

Applying for a variable rate is recommended if you plan to repay the entire balance within the next 3 to 5 years.

It is solely based on the average interest rate of the loans you wish to consolidate.

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