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Your Refi Checklist and FAQs

Gather your info

Let's get to the point. Here’s checklist of what private lenders typically want to see early in the refi process:

  • Your driver’s license number or state ID number
  • Your Social Security number
  • Tax forms, specifically W-2 forms and 1099 forms for the previous one to two years
  • Bank, credit card, and mortgage statements 
  • Statements from all your existing student loans

You'll move through the application process more quickly if you're organized.

Refi FAQs

What is a Refi?

It’s basically a new loan —with a new (and hopefully lower) rate and new term—that’s used to consolidate and pay off your existing student loans. 

Depending on the rates and terms of your existing loans, refinancing may lower your payments and lower the amount of interest you pay over the life of the new loan.

What are the benefits of a refi loan?

If you have multiple loans, you may find it easier to make one payment instead of many.

Lower monthly payments, lower interest rates and paying less interest over the life of your loan are also potential benefits — but how much you might save depends on the terms of your existing loans and on your own credit rating.

If you refinance, you will lose any benefits of your original loans, so it pays to do your homework.

Why shouldn’t I refinance my Federal Student Loans?

If you have a secure job, emergency savings, strong credit, and don’t think you’ll use the distressed borrower options available with Federal Student Loans, refinancing may be a good choice for you. 

If you refinance Federal Student Loans, however, here are a few things you could lose:

  • Fixed interest rates. The interest rate on your Federal Student Loan will never go up or down. If you refinance with a variable rate loan, that’s not the case. 
  • Income-driven repayment. If your income is low, you could have a reduced monthly payment without refinancing. If you refinance, you lose the benefit.
  • Distressed borrower options. The government offers options for deferment (putting off payments) and forbearance (temporarily stopping payments because of financial hardship). In addition, depending on the type of loan you have, there are circumstances where the government may forgive your loan altogether if you die or become permanently disabled.
  • Loan forgiveness programs. You could also have your loan forgiven in exchange for performing certain types of public service. You lose that opportunity if you refinance.
  • Military service deferment. If you are an active duty service member and you got your Federal Student Loan before you were deployed, you’re entitled to interest rate and repayment benefits for your loan.

How long does refinancing take?

For cuLearn credit unions, it could take several weeks from application to loan payoff. The timing may differ with other lenders, so be sure to ask and plan accordingly.

That said, don’t stop making payments on your existing loans until you’re sure the process is complete! (Seriously, this could derail your loan.)

Which is better—a fixed or variable rate?

It depends on your priorities.

If you prefer an interest rate and monthly payment that won’t change over the life of the loan, then a fixed interest rate might be your best choice.

If the lowest possible starting rate is important to you—and you can live with ups and downs in the rate based on the economy, a variable rate may save you money over the long run.

Some loans will cap the amount your rate can increase. Others don’t have a cap. Make sure you can afford the worst-case scenario or can refinance into a fixed rate loan when/if the interest rate rises toa level that's uncomfortable for you.

What if my credit score is bad?

The best advice is to work on your credit rating before you apply to refinance. Here are 4 critical steps you should take right now: 

  1. Check your credit report – dispute anything that seems wrong.
  2. Start paying your bills on time.
  3. If you’ve missed payments, get current and stay current.
  4. Pay off your credit card balance in full each month.

Check out some other tips on how to boost your credit score.

If you can demonstrate to a lender that you’re trying hard to get your finances in order, they may be more willing to work with you. Also, if you are a creditworthy borrower, you may qualify for a lower rate and improved terms.