Best time to refinance loans

[jsr52]

Currently a fellow with 60k/year from fellowship and ~ 30k-50k/year moonlighting. 200,000 in loans at 6.5% paying about 700/month IBR and hardly keeping up with interest. Does it make sense to wait till I am an attending in two years to refinance, or should I refinance now.  Refinancing now might be tricky since my extra moonlighitng salary is not guaranteed, im not confident I can make payments of >1000/month until I am an attending. Alternatively I can throw extra money at the loans now before refinancing. I'm 90% certain I will wind up in private practice and for go PSLF.

 

Thanks in advance

[jsr52]

Also it looks like when I calculate interest rates now if I refinance with the above salary the interest rates are ~4-5%, with an attending salary of atleast 300,000 the estimated interest rates drop further to the 3-4% range.

[MochaDoc]

You may refinance multiple times. If the 4-5% IR range saves you money (it will compared to your current 6+%) and you're definitely not going to pursue PSLF, refinance now and refinance again once you become an attending. Either way, you'll save some money in interest. Also, just because you're approved to refinance your loans doesn't mean you have to refinance your loans. This goes to say if your estimated monthly payments differ drastically from the actual payments, just decline that refinance offer.

As someone who refinanced with Earnest, I recommend you check them out even if you're wary of their invasive application process. One great benefit is the option to adjust your payment downward as you pay your loan off. For example, let's say your original monthly payment was $700/month and you throw an extra couple thousand at your loan one month. Your minimum monthly payment will decrease from $700. You may choose to pay this new, lower monthly payment by logging onto the client portal and making the change with ease. I think this is a great feature for folks who are worried about making lump sums but still being on the hook for the original monthly payment amount.

As far as putting extra money towards your loan now, I would keep extra savings on hand, refinance and then throw that extra money at the loan. Earnest likes to know you have at least 3 months of loan payments on hand when you apply.

[shantster]

I refinanced with DRB during residency so my monthly rate is $100/month until I finish training. This doesn't get me the best rates they offer but it was much better than the 6.8% previously. I'm completing fellowship and starting an attending position this summer. I will be refinancing with another company as soon as I get my second attending paycheck.

[The White Coat Investor]

6.5%? $200K? $700 payments? Your payments are NOT covering the interest. The interest is over $1000 a month.

At any rate, if you refinance now with DRB you'll probably only get to 5.5% or so. You'll just lower your payments to $100 a month.

SoFi is just now starting to refinance people a year out from residency graduation if you have a contract in hand. Not sure what the payments would be for that last year (could be full, could be completely deferred) but if you want to refinance before then, DRB is pretty much it these days.

[jsr52]

It looks like I could get about 5.65% from DRB, if I do that before I finish fellowship would I be shooting myself in the foot if I end up working at a Job that is a 403b. I don't want to Practice academic medicine, but I could see myself at a large group affiliated with a academic hospital...

That's why I'm leaning towards keeping loans at 6.5% getting my payments up and refinancing in two years as attending. Or is refiance now the clear choice?

Thanks

[MochaDoc]

jsr52 wrote:

It looks like I could get about 5.65% from DRB, if I do that before I finish fellowship would I be shooting myself in the foot if I end up working at a Job that is a 403b. I don’t want to Practice academic medicine, but I could see myself at a large group affiliated with a academic hospital…

That’s why I’m leaning towards keeping loans at 6.5% getting my payments up and refinancing in two years as attending. Or is refiance now the clear choice?

Thanks

Click to expand...

If you're unsure about PSLF, wait. You could hedge your bets and still throw extra money at the loan while you wait but I'm not knowledgeable about the pros and cons of such a plan so I'll leave it up to the experts, such as DMFA, to chime in.

[jsr52]

Or would it make sense to only finance the private loans I have that don't qualify for PSLF (about 30k at 6.5%), the rest 130k are Grad Plus

[MochaDoc]

jsr52 wrote:

Or would it make sense to only finance the private loans I have that don’t qualify for PSLF (about 30k at 6.5%), the rest 130k are Grad Plus

Click to expand...

Refinancing and subsequently paying off PSLF-ineligible loans sounds like a good hybrid strategy until you decide what to do about your PSLF-eligible loans. With $30-50k/year in moonlighting income, I don't see why you couldn't knock out this refinanced loan in 12 months if you were committed to doing so while living comfortably.

[Craigy]

jsr52 wrote:

It looks like I could get about 5.65% from DRB, if I do that before I finish fellowship would I be shooting myself in the foot if I end up working at a Job that is a 403b. I don’t want to Practice academic medicine, but I could see myself at a large group affiliated with a academic hospital…

That’s why I’m leaning towards keeping loans at 6.5% getting my payments up and refinancing in two years as attending. Or is refiance now the clear choice?

Thanks

Click to expand...

Before you pull the trigger with DRB definitely shop that rate around.  I just refi'd about $150k of loans with only a resident salary at Earnest and was in the 4's.  With your additional income you should qualify for a good rate.

Or like you said, you may still want to pursue forgiveness.

Just don't sign with the first lender you check out without shopping it around.