As the job market becomes increasingly uncertain and precarious for graduating students, managing personal finances is proving to be more challenging than expected. Over the last ten weeks, a staggering 40 million Americans have filed for unemployment. With over four million college graduates struggling to enter the job market, the COVID-19 pandemic has closed off opportunities before they even presented themselves. While some students have managed to navigate the turbulent COVID-19 landscape, the large majority is struggling to get by. Read on to find about the refinancing student loan.
The ongoing crisis has become even more challenging for graduates who are saddled with exorbitant student loans.
As financial insecurity increases among fresh graduates, many have begun to consider ELFI refinancing student loan as a way to free up cash for basic expenses due to the lower monthly payments. In fact, a lot of Gen Xers and millennials are also considering minimizing student loan debt by opting for refinancing.
If professors, mentors, friends, or family have recommended refinancing student loan but you aren’t quite sure how to go about it, we’ll break down the basics so you can get started.
What Should I Know About refinancing student loan?
Refinancing student loan is the process of replacing old loans with new loans that have a lower interest rate.
Borrowers can choose to refinance private and federal student loans.
For instance, if you have a private student loan with a high-interest rate that’s taking a toll on your financial planning, you can easily obtain a lower interest rate by opting for a secure refinancing plan.
One of the most convenient and flexible options itself refinancing student loan, which helps graduates and former students save an average of $272 each month. In fact, the total savings add up to an astounding $13,940 (or more!).
As the COVID-19 pandemic causes interest rates to drop to near zero, many people are actively considering refinancing and are searching for the best student loan refinancing rates available.
Here are some basic points to note before you begin the process of refinancing student loan:
- Student loan refinancing terms commonly range from 5–20 years
- Ensuring a good credit score (at least 680) is imperative, as a high score is more likely to help you obtain a better rate
- Your debt-to-income ratio shouldn’t be too high
- If you’re refinancing federal student loans, you may have to give up certain borrower protections and benefits (this clause doesn’t apply to private loans)
- If you have federal student loans, we suggest examining your benefits and determining whether you’ll actually use them (if not, refinancing federal loans is a great way to save money)
- There are no limits on how many times student loans can be refinanced
How to Refinance Your Student Loans
Once you’ve familiarized yourself with the required information, you’re ready to refinance your student loans.
We’ve rounded up each step of the process to help you breeze through it without feeling overwhelmed, ill-equipped, or unprepared.
Step 1: Research Lenders and Choose the Best Option
With a lot of different lenders available, narrowing it down to the right one can be challenging, to say the least.
We suggest doing your research, so you can opt for reliable lenders with a great track record. Of course, they should offer some of the lowest refinancing rates available as well.
In addition, look for ample experience. With over 30 years of experience, Education Loan Finance can help you start off on the right foot. Their flexible options help graduates and former students pick a great payment plan without worrying about paying prepayment, origination, and application fees.
We also suggest determining whether you want a fixed or variable interest rates. In addition, choose the right repayment period based on your preferences.
Step 2: Get Prequalified
Applying for prequalification allows lenders to offer preliminary rates with a soft credit inquiry. It’s essential to note that a soft inquiry will not impact your credit score in any way.
Once your credit has been checked, you will be pre-approved for student loan refinancing.
Step 3: Collect the Required Paperwork
After getting pre-qualified, you’ll be required to gather your documents to proceed with the process.
Submitting a full application is one of the most important stages of ensuring the loan refinancing process runs smoothly. You’ll be requested to provide more information about your loans and financial standing at this stage.
We suggest gathering the following supporting documents:
- Proof of employment (recent pay stubs, W-2 form)
- Account information to make online payments
- Proof of graduation
- Proof of residency
- Government-issued ID
- Payoff letter or current billing statement
Step 4: Apply!
While selecting the right interest rate and refinancing period in the earlier stages of the process is important, we strongly suggest revisiting your initial plan and making changes accordingly. This will help ensure your decision is up-to-date and in alignment with your current preferences.
Carefully consider your options and choose the right plan with the appropriate terms and rates.
Consult anELFI Personal Loan Advisor for individualized assistance so you can gain more insights into the process and select the best option for your needs.
Step 5: Upload and Sign Your Documents Electronically
Once you’ve finalized everything and received approval, you’ll be requested to upload each document electronically. You can choose to send screenshots or upload the required paperwork from your smartphone.
This will be followed with a request to sign the documents electronically to accept the loan.
If you don’t receive approval, we suggest inquiring into the reason so you can proceed accordingly. In most cases, applicants are denied refinancing if they have a bad credit score. This can be ameliorated by adding a co-signer or lowering your debt-to-income ratio.
Step 6: Await Loan Payoff
After you’ve signed the documents, your new lender will pay off your current lender. Moving forward, you’ll be required to make payments to your new refinancing company.
As one of the most effective ways to slash $$$ off your current student loans, student loan refinancing is a great way to balance your finances and pay off your loans faster.
In fact, lower monthly payments also decrease the debt-to-income ratio.
How does that help? Over time, it’ll become much easier for you to qualify for a mortgage.
If you’re still contemplating whether student loan refinancing is for you, we suggest browsing through some benefits and FAQs to help form your decision.
Ultimately, select the best option that fits your requirements; one that helps improve your financial planning prospects.