Many new grads haven’t had to repay loans just yet. Many more have never refinanced a loan. In this article, I detail how to refinance student loans so you can become familiar with the process. In doing so, you’ll increase the likelihood of having a good experience from beginning to end.
To make the overall refinance process easier, we’ve developed a student loan refinance checklist available for free. The checklist is designed to complement our Student Loan Refinancing Guide. If you haven’t so already, I recommend reading our Student Loan Refinance Guide before reading this article.
Table of Contents
- Step 1: Gather Your Paperwork
- Step 2: Do Your Research
- Step 3: Get Pre-Approved
- Step 4: Get Verified
- Step 5: Get Approved & Funded
Step One: Gather Your Paperwork
The first two steps of the student loan refinance process should be the most time consuming. Completing these steps correctly can save you major headaches down the road.
Combined, these steps will help you determine whether you should refinance your student loan in the first place.
For example, if you graduated 10 months ago with your doctorate in physical therapy, there is a good chance you can refinance your student loans. However, each situation is different.
Let’s dive into it…
Most recent graduates usually have more than one loan so it is critical to get into the next level of details. For example, you have to determine which student loans you should refinance based on your existing interest rates, balances, terms etc…
This is a key step to ensure that you optimize your student loan refinance approach. Unlike what the student loan industry would like you to believe, you do not have to refinance all your loans. You can pick and choose which loans to refinance and which ones to leave “as is”. This is one of the myths we discuss in our article 8 Student Loan Refinancing Myths.
In order to determine which loans you might refinance, you have to know what your interest rates are, which ones are private versus federal, fixed versus variable rate, and which ones may be eligible for forgiveness based on service time (if you qualify for public service loan forgiveness).
Step Two: Do Your Research
With your loan details in hand, you then have to do some market research. This entails researching which companies may refinance your loan and the types of loans they offer.
During this research, you should determine what the current market rates are and the length of the loan that is right for you. This can be a very time consuming process but it doesn’t have to be.
Here is how we can help: we’ve put together review guides for each student loan refinance company FitBUX works with. These reviews will help you asses each company’s pros and cons based on your unique situation.
At this point, if it doesn’t make sense to refinance then you can stop the refinance process. Many people skip these initial 2 steps and waste weeks and even months before they figure out that it doesn’t make since for them to refinance.
Step Three: Get Pre-Approved
If you determine that refinancing makes sense, then you can move on to step three and begin the refinance process with a finance company.
If you have built your free FitBUX profile, you can log into it and select “My Solutions” from the left hand menu. Then click the second option “Student Loan Refinance.”
There is a list of our seven student loan refinance partners. Click get rate under the company’s logo and you’ll be taken to their quick application page. You should be able to complete their quick application in 2 – 3 minutes and see rates. Getting rates will not hurt your credit score.
When doing the quick application, the more accurate information you provide, the less the loan terms will change between pre-approval and closing. However, do not get too excited yet. As I just mentioned, your “pre-approval” is not the final loan, i.e. your terms can still change.
Step Four: Get Verified
Step four of the refinance process is verification. This is where the refinance process can start to drag on.
Again, if you performed steps one and two, it will make this process a lot faster. Most of the time (I emphasize the word most), this process gets dragged on because the applicant hasn’t done his/her homework up front. See steps 1 and 2 above…
In this step, the lender needs to verify information such as income, graduation, etc… Many companies are now using technology for some of the necessary verification steps. However, there is some data only you can supply Of course, the longer you delay getting the info into the hands of the lender, the longer the process will be delayed.
One key item you will need for verification is the loan-payoff amount. For student loans, you can obtain this from your current lender. However, many lenders do not provide this information easily. If you need help getting this, your FitBUX Coach can help you as part of our free refinance service.
One word of caution as you go through your refinance process. This actually applies for any loan you may apply for (car loan, mortgage etc…). People tend to give lenders too much information thinking it will help them qualify. Do the opposite, give them what they are asking for and nothing more…i.e. try to give them as little as possible. Let the lender come back and ask you for more if they need it.
Step Five: Get Approved & Funded
Once you complete the verification step, the lender will then make a decision and choose to fund you loan (or not…). If you are approved and sign the relevant paperwork, the new lender will be ready to pay-off your existing loan and will fund your new loan. However, payments do not begin right away.
After you sign the documents, the student loan refinance company has to give you a 3 day cancelation policy. This means you have three business days to cancel this new loan.
After the 3 days, the loan is fully processed and the new lender pays off the old lender. Your first payment will be due 30 – 45 days after you sign the documents.