As a 27 year-old, college graduate living in the United States, I have my fair share of student loans. The grand total, when combined with my fiancée’s, is $115,000.
To our household, that is a terrifying number.
It should be. Debt is no joke.
Despite all this, we’ve managed to pull together a tax efficient investment strategy which allows us to utilize the tax code while simultaneously paying down the debt.
To up our game in our fight against debt we’ve accelerated our payments and lowered the interest rate on some loans thanks to refinancing with SoFI.
I haven’t spoken on the subject of refinancing a whole lot because I wasn’t sure if I would go through with it myself yet. There are some scary stats on how many people are simply not aware of the options they have when it comes to refinancing student loans. In many cases, refinancing a loan it could ultimately mean saving as much as $10,000 or more.
My goal today is to write a post about refinancing that I, myself, would have benefitted from reading three years.
So, should You Refinance Your Student Loans?
Before you consider refinancing — please, please, please — check out my previous article discussing the pros and cons to refinancing. This article focuses on my process only after I made the decision to refinance.
Step 1 – Assess Your Options
I utilized LendEDU’s service to identify 12 lenders in 3 minutes by answering 10 questions. To see what you might qualify for, take the same questionnaire via my exclusive link here.
If you have student loans, I don’t see a downside to at least assessing your options. There is no harm done on your credit score.
Step 2 – Analyze the Numbers
Once you see the lenders and the loan terms, you can then begin to analyze the numbers.
This part can be a bit tricky since the term of the loan will vary. While a 15 year loan might have an extremely low monthly payment, you’ll likely be paying much more interest over the long run.
Factor in how the change in monthly payments will impact your budget and your emergency fund.
If you decide on a variable interest instead of a fixed rate, understand how the rate may change and how your budget will be impacted by the price swings. For more on variable rate loans, check out this post by Sam from Financial Samurai.
I found an offer from SoFI that offered a lower interest rate. My original loan was relatively low at 5.382%. My new loan is now at 4.03%.
I also agreed to a 5 year variable rate loan. The current term remaining on my loans was about 6 years, so I’ve already set myself up to pay the loans off a year early. My goal is to have this loan eliminated within 2 years.
Step 3 – Closing on the Loan
The final step is putting all your ducks in a row. There is a good amount of paperwork associated with refinancing.
I refinanced with SoFi, as they offered the best options. In addition they made the process smooth and easy. They were accommodating when I didn’t have one of my W-2’s on hand, and were flexible to accept different types of documents (my tax return for that same year).
When it comes to promoting other services and products, I only feel comfortable doing so when the product is something that has benefited me OR where I can see a lot of readers receiving a benefit. This same feeling applies to SoFi so I feel very comfortable recommending them. Again, refinancing is a complicated process, but if the numbers work in your favor, I think you’ll be happy with your choice.
Once the lender reviews the documents, they will let you know if you’ve been approved or denied. This part is a bit hectic, but I know my credit score is good after having had to recently repair it.
After I received my approval, I signed the loan agreement. Again, if you’re considering this, please review my list of pros and cons to refinancing before you decide to opt in for a better student loan deal.
SoFi funded my old student loan and now I set up my autopay to send monthly payments to SoFi’s loan administrator.
One final pro tip: Make sure you continue to make old monthly payments UNTIL you receive confirmation that the original loan is paid and the refinanced loan is up.
These things can take as much as a month to complete, so be patient. Soon you’ll be enjoying the benefits of your refinanced student loan!
Have you refinanced a student loan, personal loan or mortgage? Was there any step of the process I left out that you want to know more about? Leave a comment and let me know.
P.S. Another few hours spent on my blog’s theme. I’m real happy with how it is looking so far. Thank you for all the great comments!