Refinancing - apply to multiple companies?

[jegroth]

I'm a 3rd year resident in a 4 year program.  High 200k debt.  I applied to DRB about one ago but was denied citing poor income:debt ratio.  I'm married wife makes 60k and has about 30k in student loans.

I'm interested in refinancing my loans, however I'm worried that I'm just going denied again because of my continued poor income:debt ratio.  My credit score is in the high 700s.  Compared to when I applied last year, there are many more companies offering student loan refinancing (Lend Key, Common Bond, SoFi, LinkCapital, DRB, Credible).

- Is it worth reapplying, or am I just going to get denied again because my income:debt ratio hasn't improved?

- How do I get the best interest rate?  I'm assuming applying to a couple different companies would be advised but how many - three?  five?

- Do you have any recommendations which companies I should try first?  Should I try DRB again?

- Does adding my wife (who has a good credit score) as a cosigner improve my interest rate?

Thanks everyone

[Joy Sorensen Navarre Navigate]

Many residents are finding success by following the WCI suggestions, see Dec 2015 post: https://www.whitecoatinvestor.com/forums/topic/the-wci-student-loan-refinancing-deals/

Credible.com is an easy way to start comparing rates. You may receive offers from a variety of lenders. Plus, it's a soft credit pull and won't impact your credit score.

Lenders have different underwriting guidelines. Some lenders (Commonbond, for example) requires a physician have an employment contract that starts within 6 months.

Of course, if you have federal loans and plan to pursue Public Service Loan Forgiveness, do not consolidate with a private lender. Most WCI readers know this. However, just last week I consulted with a physician who would have benefitted from PSLF, but missed out because of refinancing his federal loans to a non-federal lender.

 

 

[Craigy]

What other debt do you have?  Mortgage?  Car?  Credit Card?  Rent?  Is it just the student loans?

When you talked to DRB, did they disclose the ratio they calculated for you?  If so, you'll know how realistic it is or isn't for you to adjust your DTI.

Generally speaking adding your spouse into the loan brings their income into the equation, but also their debt.  Some lenders will factor in these without including them in the loan anyway.

If you have a car note nearing completion, payoff the rest of the car which will add hundreds back in your favor on the debt/income ratio.  Of course, carrying any credit card debt will really wreck your chances, so ideally that should be gone too.  If it's realistic, pay off that $30k of wife's student loans if those factor into the equation.

One strategy that we took with DRB was to take a longer-term loan with a lower payment that would allow us to fit under the debt/income ratio that DRB requires.  So, instead of a 5 or 10 year note, we have a 15 year note, which at the time came with a very modest rate premium.  Of course, we can pay the note off early if we want to.

To get the best rate, you'll have to shop around, which is a pain, but ideally you should at least be checking the general rates offered by companies before you apply.

[The White Coat Investor]

Are you SURE you want to refinance in residency? It's really usually only the right move for private loans. It is especially a bad move if you're not sure if you're going for PSLF yet or not.

As a resident, the best rate you're going to get is around 5.5%, not a huge savings compared to the 5.5-7% federal loans most residents have. Your effective rate under REPAYE is often lower than 5.5%.

That said, if you don't have an attending contract in hand, your choices are DRB, LinkCapital, and one more that will hopefully be lending by early next year. Don't bother applying with the others.