Can I try to refinance my student loan?

Home Forums Purchase Program Can I try to refinance my student loan?

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  • #68325
    ltooks
    Participant

    Im aware they do not want you to take out new loans but if I have the ability to refinance my student loan is that ok? Im trying to reduce my debts. My current student loan amount is 80 with a 7.08 int rate.

    #68327
    Nelsont
    Member

    Refinancing is OK. It’s actually suggested if you need to find a way to reduced your monthly debt. BUT talk it over with your MC before you do anything. This way you will both be on the same page. And think about if refinancing is even worth it without also decreasing your other monthly obligations. $80/month @ 7.08% is not going to net a large difference after refinancing. Combining that with refinancing other loans or paying off other loans will certainly make a difference.

    • This reply was modified 2 years, 2 months ago by Nelsont.
    #68333
    TTrumble
    Member

    Hello ltooks,

    I suspect you may have meant a total student debt of $80,000, not an $80 per month payment.

    Refinancing, or any other way of reducing your monthly obligations, is a good thing as it frees up money that can go toward possibly increasing your affordability.

    The “trick” to it is that you are going to have to show that you haven’t missed a single payment along the way as you transition from the old servicer to the new one. In short, you need to show that the new loan is just the continuation of the old one and you have done so smoothly.

    Provide info on both the new and old loans and especially the payoff notice for the old loan. Those, along with a Letter of Explanation, should get you taken care of.

    Tim Trumble
    Online Operations, NACA
    ttrumble@naca.com

    #68371
    ltooks
    Participant

    @ttrumble I pay around 80 a month. I took the loan out for my daughter. I have a current balance of 7K. I just paid the other one I had off. I wanted to bring my monthly debt down so I could qualify for more house. Paying down wont change my monthly payment so I figured paying down about 1-2k and refinancing may help me in obtaining a smaller monthly payment.

    #68375
    Nelsont
    Member

    Yes. You will need to obtain a letter from the loan provider detailing your payments if you had to start paying today.

    #68384
    TTrumble
    Member

    Hello ltooks,

    Thanks for clarifying. I’ve got a suspicion the difference in the payment amount after the refi may not be that big. I don’t have the experience with student loan financing to know for sure, but I’m wondering if they’ll even refinance a balance that small. Even if they do, the closing costs on the refi would likely negate any savings you would receive from a lower rate, extended term, etc.

    You are probably better off just getting super intense and throw every penny you can at that loan until its gone, and make a commitment to yourself to have it gone by the end of the year.

    NACA-wise, talk to your counselor if you plan to take the payoff approach and ask about the amount you pay above and beyond the $80 required payment each month being credited toward your Payment Shock.

    Tim Trumble
    Online Operations, NACA
    ttrumble@naca.com

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