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  • Need help with refinance

    Hello,

    First of all, I want to thank you for having this forum available to individuals like me who are not the smartest when it comes to finance.

    Now as far as my situation. I have appx. 200 thousand in federal loans with interest rate of 6.8%. I just graduated residency and I will be starting an attending job with AGI approximately the same as my loan amount. My goal is to pay of my loans ASAP, ideally within the next 2-3 years by being putting most of my income towards loan payment and being frugal. From what I read it seems refinancing is the way to go. I don't have a credit history (unfortunately I shared my bank account with someone else and all payments I made were not added to my credit report):

    1)Which bank is best to refinance with given my likely absent credit history, also I will be living in Iowa as I know location can be a factor?

    2)How long does it typically take to refinance?

    If most places that you refinance need a good credit score, I am thinking of choosing REPAYE to pay of my loans until I build a credit history so that I can refinance?.

    3)Can I refinance my loans mid-year or while I'm in an income-based repayment plan (REPAYE)?

    4)If I make extra payments while in REPAYE, does that go towards principal or interest and will it affect the interest subsidy?

    Thank you.

  • #2
    I would start with figuring out what your actual credit score is (you say "likely" absent credit history).  You've been carrying 200K in debt from school without missing any payments/not delinquent...probably worth something.   I've used creditkarma.com for about 8 years without any apparent problem and it makes it pretty easy to track scores.  I don't think there is any harm to calling up SoFi or one of the other companies and seeing what they can offer you.  If you haven't started your job yet it can sometimes take a bit of time to get verification of income/employment stuff done.  When I used DRB it took me 3 months about 1.5 years ago.

    1) I don't think it matters

    2) 2 weeks to over 3 months

    3) Refinance anytime

    4) Not sure

    Comment


    • #3
      Friends of mine have loved SoFi and DRB.

      Get quotes from the following (WCI gets a kickback, so you can help him replace his 2002 Dodge Durango):

      Lend Key -$300 back to you

      All loans funded by community lenders.

      Common Bond – $300 back to you

      Long-time player, no maximum loan amount, they do Parent PLUS loans too.

      SoFi – $300 back to you

      One of the top two lenders for WCI readers. Literally hundreds of satisfied customers.

      Credible -$200 back to you

      The “Kayak” of student loan refinancing- apply with multiple companies with one application.

      Earnest – $300 back to you

      You get to choose custom terms- pick your payment and switch between fixed and variable rates without charge.

      LinkCapital – $100 back to you





      One of only two companies that will refinance residents.






      Darien Rowayton Bank (DRB) – $300 back to you

      One of only two companies that will refinance residents and one of the top two lenders for WCI readers. Not the fanciest website, but often the lowest rates.

      If you haven't (you probably have), read this: https://www.whitecoatinvestor.com/what-should-i-do-with-my-student-loans/

      Comment


      • #4




         

        4)If I make extra payments while in REPAYE, does that go towards principal or interest and will it affect the interest subsidy?


        Payments go to interest first, then principal once all interest is satisfied.

        Interest subsidy is unpaid interest each month, so if you make a payment greater than your interest accrual in August, you'll still get an interest subsidy for unpaid interest in September.  It won't really make that much a difference, and every bit you can pay down will be useful, because:

        • There's no capitalization while you're in RePAYE, so accrual is basically the same each month (no interest on interest)

        • Your interest will capitalize to your principal when you refinance, so the amount you'll owe is the same


        You'll find out what your credit rating is soon enough with applying...but many banks have a free service through Experian (USAA does) which shows you your score each month.  Although, I will say, the one they showed me was slightly different than the three-bureau score I got when I did my full credit report for my mortgage refi (even the Experian rating, let alone the three bureau average).

        Comment


        • #5
          related question here. my wife has 30K in student loans at 6.8%. I am still a fellow, but already have my attending contract for when I start my first real job next August.  we are aggressively paying down the loans and plan to finish them in the next 15 months. is it worth refinancing?

          Comment


          • #6




            related question here. my wife has 30K in student loans at 6.8%. I am still a fellow, but already have my attending contract for when I start my first real job next August.  we are aggressively paying down the loans and plan to finish them in the next 15 months. is it worth refinancing?
            Click to expand...


            Probably not unless you qualify for one of the above $300 rebates. Do you have a family member who would be willing to do a personal-refi at 3% or so? Money that they have sitting in a MMA earning less than 1%?
            Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

            Comment


            • #7




              related question here. my wife has 30K in student loans at 6.8%. I am still a fellow, but already have my attending contract for when I start my first real job next August.  we are aggressively paying down the loans and plan to finish them in the next 15 months. is it worth refinancing?
              Click to expand...


              Seconded.  The spread on a short-term variable rate loan to 6.8% on that amount of money is only about $900 over a year.

              Up to you if you want to jump through the hoops.  Personally I'm a cheapskate so I'd check it out, save a few hundred if I could.

              Comment


              • #8
                Assuming 30k at 6.8% for 15 periods, you'll pay $1,378 in interest.

                Let's say you get that down to 2.5% (idk if they're even offering any that low), you'd pay $502.

                If a few hours' paperwork is worth $876 over 15 months, plus any rebate they may offer, minus the minimal credit rating penalty, sure.  I guess it depends on how much time it takes and what your time is worth.

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