How To Tell If Student Loan Refinancing Is Right For You

Published on Author Kelsey Radcliffe

Student debt has surpassed credit card and auto debt combined so it’s no great mystery why borrowers are seeking relief in a variety of ways. One of the most popular options for borrowers to lower the cost of their student loans is through refinancing. There are many factors to consider when thinking about refinancing your student loans.  If you are on the fence about refinancing and you’re not quite sure if it’s right for you, read on.

Eligibility and Credit Requirements

First things first — do you qualify? Before starting an application, it’s good to know the requirements so you don’t fill out an unnecessary paperwork. Here are the basic eligibility requirements to get you started:

*A FICO score of 700 or higher and meet our credit requirements. A credit score of 670-699 requires a cosigner.

*Annual income of $42,000 or higher (lower income requires cosigner)

*Minimum loan balance of $20,000

*Employed for at least 2 years (waived for Board-certified and currently practicing MD, DO and DDS borrowers)

*At least 23 years of age

*U.S. Citizen

If you meet some (but not all) of this criteria and need to apply with a cosigner, your cosigner will need a FICO of 720 or higher and to have an annual income at or above $50,000. To learn more about what a cosigner means for your loan, read our blog post.

It’s important to know your FICO credit score before you begin, and if you are considering a cosigner, you’ll need to know their score, too. If you meet the requirements but still want to apply with a cosigner in hopes of qualifying for a better rate, keep in mind that a cosigner will only help you if they have a higher FICO score than you have. Our rates are based on your credit score, not your income, and if you apply with a cosigner we’ll use the higher FICO score to present your rate. If you aren’t sure what your score is you can check your rate for free with CreditKarma before you get started.

Rates, Fees, and Discounts

Now you probably want to know if the refinancing process will actually save you money, and if so, how much? Unlike other lenders, Purefy lets you check your rate before a credit check or an application so you can see what you will save before even starting the process. You can use our Find My Rate tool to see the fixed and variable interest rates you qualify for, or you can give us a call at 202-524-1115 if you’d rather discuss your options with one of our loan specialists. We can even calculate how much interest you’d save compared to your current loan situation and the cost of your monthly payments after refinancing. Remember, if your current loans have varying interest rates and some are lower than what we offer, you always have the option of only refinancing your higher interest rate loans to maximize your savings.

A lot of potential borrowers also wonder about Purefy’s fees. Good news: there aren’t any! We offer no origination or application fees, no pre-payment penalties, and no penalties if you choose to pay off your loan early.

What about discounts? We offer a discount of .25% on your interest rate if you set up automatic (or ACH) payments from your checking account. If you sign up for a free Purefy checking account and set up automatic payments, you can save an additional .25%, bringing your total savings to .50%! The Purefy account is completely and totally free — there are no monthly fees or balance requirements and no ATM fees anywhere in the United States. You can sign up for the free Purefy checking account here. We also offer discounts for advanced and specialty degrees.

Term Length and Fixed vs. Variable Interest Rates

A goal many people have when refinancing is to shorten their term to pay off their student loans faster. Others want to keep their term the same and just lower their interest rate. We cover different strategies for refinancing in more detail here if you want to weigh your options.

Purefy offers 5, 8 and 12 year terms for fixed interest rates and 5 or 8 year terms for variable interest rates. Whether a fixed or variable rate is right for you all depends on your financial needs and flexibility. If you aren’t sure which is best, you can always contact one of our loan specialists at 202-524-1115.

If you’re ready to take the plunge and refinance your student loans, click here to get started.

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