Looking to refinance my student loans ~$340,000 at 6.8%.
Best offers I have are from SoFi, looking at the 7-yr term my options are:
Fixed ~$4,598.35/mo @ 3.875% = total $386,261.40
Variable ~$4,481.78/mo @ 3.115% (cap 8.95%) = total $376,469.52
Overall savings if variable rate does not change is $9,791.88 (difference of 0.76% rate)
I've read on this site before (https://www.whitecoatinvestor.com/fixed-versus-variable-loans/) about the arguments in favor of variable loans; that basically the odds are in your favor that you will save money. However, when this was written, the incentive for choosing variable loans was much greater, closer to 1.5 - 2% difference in rates offered, allowing for greater fluctuations in inflation in order for the variable option to win out.
Is the overall savings (~$9,800 over the term of the loan) worth the increased risk of the smaller difference in interest rates, 0.76% vs 1.5%, currently now offered between the two options? Are the odds still in the variable term's favor?
Thanks.
Best offers I have are from SoFi, looking at the 7-yr term my options are:
Fixed ~$4,598.35/mo @ 3.875% = total $386,261.40
Variable ~$4,481.78/mo @ 3.115% (cap 8.95%) = total $376,469.52
Overall savings if variable rate does not change is $9,791.88 (difference of 0.76% rate)
I've read on this site before (https://www.whitecoatinvestor.com/fixed-versus-variable-loans/) about the arguments in favor of variable loans; that basically the odds are in your favor that you will save money. However, when this was written, the incentive for choosing variable loans was much greater, closer to 1.5 - 2% difference in rates offered, allowing for greater fluctuations in inflation in order for the variable option to win out.
Is the overall savings (~$9,800 over the term of the loan) worth the increased risk of the smaller difference in interest rates, 0.76% vs 1.5%, currently now offered between the two options? Are the odds still in the variable term's favor?
Thanks.
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