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Student loans: perhaps the most universal Millennial experience. If you don’t have loans, this article isn’t for you. Go enjoy an extra martini or two.
For the rest of us, let’s talk student loan refinancing and why you might want to consider it now. We’re going to cover the what, why, and how of student loan refinancing, and introduce you to a great option for getting the ball rolling (or at least getting your research started).
You get to find out what terms a bunch of companies would offer you at once.
The quick and dirty: all signs point to the Fed continuing to raise interest rates. That can be bad news for people with debt, particularly student loan debt. You may want to refinance now whether you have a fixed or variable interest rate. If you have a variable rate and want to avoid paying more as rates go up, you might want to look into refinancing. Refinancing your loan could help you save money in the long term. If you have a high fixed rate and were considering maybe refinancing someday, now’s the time. You may be able to lock in a lower rate; it’s likely that rates are only going up from here.
What is refinancing?
It’s kind of like breaking up with your old loan. But your loan doesn’t know you have a new, better loan. (Don’t worry, in this analogy the old loan doesn’t give a f*&! what you do with the new loan, they’re still getting theirs.)
To be more technical about it:
Refinancing a loan is when you take out a new loan to pay off a current loan. The new loan has a new interest rate and payment plan. It may sound like debt on debt, but it can be a great way to make your payments more manageable and pay less over time.
Usually, refinancing only makes sense if the new loan has a different (lower) interest rate and/or a different payment schedule.
Why you should consider refinancing.
VARIABLE INTEREST RATES.
When you signed up for your loan you may have agreed to a plan with variable interest rates. This might not be a bad thing. But it might be. Variable interest rates tend to start out low and get higher. It may not have felt so bad when you first started paying it off, but now that you’ve reached the point where the rates have started to rise you may notice that your payments are making less and less of a dent in your mountain of debt.
YOUR CREDIT SCORE IS BETTER.
When you first applied for your loan your credit might not have been stellar, or even existent. We see you college freshman and single parents headed back to school. If you’ve put in the work and whipped your credit score into shape, you may qualify for a better loan!
YOU DON’T ANTICIPATE NEEDING ANY OF THE BENEFITS PROVIDED BY YOUR LOAN.
This one’s for federal loan holders only. For instance, if you have a federal loan that offers forgiveness after a certain amount of civil service, and you don’t plan on doing that civil service, a better option might be available for you. Quick note: If you’re eligible for PSLF or IBR forgiveness, it may not make sense to refinance. If your student loan involves forgiveness options you should definitely take a close look before you refinance.
YOU’RE HAVING TROUBLE KEEPING UP WITH THE PAYMENTS.
If you’re struggling to keep up with your payment schedule, refinancing can be a way to help get back on a schedule that can work for you. Note: Refinancing is not a miracle, and if you’re struggling too badly with payments you may need to consider some other options.
How to refinance.
There are SO many resources for refinancing your loans. Startups focused on student loan refinancing have blossomed like hipsters in Brooklyn and Portland. There are more than you can count, or would ever want to. So we’ve done some of the work for you. Meet Credible.
At Stash Wealth we take your financial future seriously, if you’ve ever had a call with us, you know we don’t mess around. Credible is the real deal. There are a lot of different options for how to refinance, one quick Google search can quickly send you down a rabbit hole of options. Here’s why we chose Credible, and why we recommend you choose them too:
1. CREDIBLE IS AN AGGREGATOR.
This means you get to find out what terms a bunch of companies would offer you at once. (Can we get a hell yes for putting all the damn information in one place!?)
2. THERE’S NO HARD CREDIT PULL.
Many lenders do what’s called a ‘hard pull’ to check your credit before offering you rates. Credible doesn’t. This is important because hard pulls are bad news for your credit score.
Credible makes it quick and easy to find out your new rate.
If you want to dive deeper into the nuts and bolts of what refinancing is, Student Loan Hero is a great resource. A great place to start is Everything You Need to Know About Refinancing a Loan. If you’re ready for a really deep dive, The 20 Most Common Questions About Student Loan Refinancing is engrossing. Okay, maybe not engrossing, but it has a lot of great information if you’re the type of person that dives down research rabbit holes like they’re Netflix binges. These resources get into stuff like consolidation, federal vs private loans, and who might not benefit from refinancing.
What the refinancing process will feel like.
1. YOU APPLY.
This requires filling out a super quick and easy form.
2. INSTANTLY GET YOUR RATES BACK.
Sometimes you’ll get both variable and fixed rates. At the moment, Stash suggests that you only evaluate the fixed rate offers. Start by evaluating based on rate, and then check out monthly payment amounts. Ideally, it’s best to pick the lowest fixed rate with a payment you feel okay being on the hook for each month.
3. COMPARE YOUR PRE-QUALIFIED OPTIONS AND CHOOSE!
This is when you choose the plan that’s best for you. Take your time and consider your options.
4. GET YOUR FINAL OFFER IN AS LITTLE AS A FEW HOURS.
Once your decision has been made you will get your final decision. Sometimes this takes as little as a few hours. After you select a prequalified rate on Credible, you complete a few incremental fields required by the lender they selected. But a lot of that material can be transported over via a tooltip.
5. LOGIN TO YOUR NEW LENDER’S PORTAL.
Once you get confirmation of your final offer, Credible will give you login instructions for your new lender’s online portal. You will then upload documents and sign your offer. Don’t worry, this isn’t starting again, Credible sends over your user info and loan information and imports it to your new lender automatically.
6. YOU BEGIN MAKING PAYMENTS DIRECTLY TO YOUR NEW PROVIDER.
That’s it! Click here to get started.