Refinancing with SoFi is said to be one of the best decisions you can make to help you pay off an existing loan. More so, they offer a lot of perks that will make you feel like they are more than just a refinancing institution.
It is probably safe to say that most of us dream of graduating from college. Thus, we are willing to do anything just to get through and finish school.
This also goes to moms like us whose ultimate dream is to see our kids finish college and be able to reach their dreams.
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But finishing school these days can be financially challenging. Over the years, tuition fees continue to rise, and it gets tougher every time. No wonder why more and more people are relying on student loans. In fact, the latest numbers suggest that more than 44 million people in the United States have a total of $1.5 trillion in student loan debt.
In addition, according to the Federal Reserve, as of February 2018, “between 2001 and 2016, the real amount of student debt owed by American households more than tripled, from about $340 billion to more than $1.3 trillion.”
Looking at these numbers alone, it can get really overwhelming, at the same time it could make us worry for our children’s future. These numbers only mean that getting a college degree these days is indeed pricey. So, how much more when it’s our children’s turn, right?
But let us leave the future in the future for now, and focus on what is in the present.
Provided you have earned your degree and landed a job. While you thought the financial woes are over, you are wrong as it is payback time. While you can wait up until you get to finish paying off your debt, in some cases, your earning is not even enough to cover all your monthly bills.
Now, this is where refinancing becomes essential.
Now, if you are worried about not being able to pay for your debt, think again. We tell you, there are ways you can get through debts because of student loans, at the same time save money – that is by refinancing.
But what does refinancing mean? What are the pros and cons of refinancing? Is refinancing with SoFi possible? Stay put as we will try to answer these questions and more.
Before moving on to our next point, you may want to check this SoFi Review by Jeff Leighton, a YouTuber, who gives his thoughts bout SoFi. This will help you get to know more about SoFi:
WHAT IS SOFI?
SoFi is actually the short term for “Social Finance”. SoFi is a lender that takes pride in its excellent customer service, as well as a personalized approach to lending as compared to other traditional lenders.
The company was established in 2011, and has since become a leader in the industry – particularly in student loan refinancing.
SoFi was one of the firsts in student loan refinancing. They offer low APRs, a user-friendly platform, as well as straightforward costs. More so, they offer perks for members like career coaching, as well as in-person events all over the country. To date, SoFi prides itself on its over $30 billion in loan funded.
Apart from student loans, SoFi also offers other financial products, which include mortgages and personal loans. By the way, if you want to easily qualify for these products, you better consider refinancing with SoFi.
WHAT DOES REFINANCING MEANS?
Refinancing refers to the process of replacing an existing loan with a new one that basically helps pay off your existing loan. The new loan has to have better terms or features to help you save money. The details of refinancing depend on the type of loan, as well as your lender.
However, the process usually looks like this:
– You have an existing loan that you want to improve on.
– You have a lender offer better terms, and then you apply for a new loan.
– Your new loan is used to pay off your existing loan in whole.
– You make payments on your new loan until you are able to pay it off.
WHAT ARE THE ADVANTAGES OF REFINANCING?
Although refinancing can be time-consuming, and in some cases, expensive, it comes with a lot of potential benefits, which include the following:
– Save Money. One of the common reasons why people get into refinancing is to save money particularly on interest costs. Basically, this happens when you refinance into a loan with a lower interest rate compared to your existing loan rate. Lowering the interest rate is particularly helpful with long-term loans, as well as large dollar amounts.
– Shortened Loan Term. Instead of opting to extend payment, you may choose to refinance into a shorter-term loan. For instance, if you have an existing 30-year home loan, you can refinance it to a 10-year home loan instead, which usually comes with a lower interest rate.
– Lower Payments. Refinancing helps lower your monthly payments, which is great so you can spend your money into something else. Basically, it gives you easier cash flow management, as well as more money for your monthly budget.
– Pay Off An Existing Loan. Loans do have a due date to, which means, you need to pay that off on or before the date stated. However, when circumstances fail, you do not have the amount you need to pay it off. That is where refinancing becomes really helpful. Refinancing is especially a great help for balloon loans or a large lump-sum payment.
WHAT ARE THE DISADVANTAGES OF REFINANCING?
While refinancing has its benefits, it does not mean it is always a wise move. Some of the disadvantages of refinancing include:
– Transaction Costs. Unfortunately, refinancing can be expensive especially with certain types of loans like home loans. You may want to ensure you will come out ahead before paying those costs first. Also, other types of loans may include additional charges like processing and origination fees.
– Higher Interest Costs. In some cases, refinancing may have the tendency to backfire. This usually happens when you stretch out loan payments over an extended period. If so, you will have to pay more interest on your debt. While you get to enjoy lower monthly payments, it may be offset by the higher lifetime cost of borrowing money. Thus, it is always best to do a loan amortization first to see how your interest costs change with different types of loans.
– Lost Benefits. Sadly, some loans have useful features, which are automatically eliminated if you do refinancing. For instance, federal student loans are more flexible as compared to private student loans. However, you may lose it if you opt to refinance.
WHY CONSIDER REFINANCING WITH SOFI?
As mentioned earlier, SoFi has become a leader in this industry. In fact, they gained such status by being an amazing refinancer for highly-qualified borrowers. If you happen to be someone who is still paying off an existing student loan but have stable employment, strong credit record, and overall, a strong applicant for refinancing, then SoFi might be the perfect fit for you.
Perks of Refinancing with SoFi
SoFi offers a lot of amazing features, which include the following:
– Five-Term Options – SoFi offers refinancing loans with a variety of term lengths to choose from. There are five, seven, 10, 15, as well as 20 years. While SoFi is not the most flexible structure in the refinancing industry, they are definitely better than their competitors. In factt, some if not most only offer two or three-term options.
– Low APRs – Comparing SoFi to other competitors in this industry, we must say that they offer competitive rates.
– No Fees – Unlike other refinancing institutions, SoFi does not charge application or origination fee. Also, there are no prepayment penalties if you opt to pay off your loan earlier than the supposed due.
– High Maximums – As compared to other refinancing institutions, SoFi refinances to as little as $5,000 in student loans. As to the maximum amount they can lend, it is only limited by your full balance of qualified education loans.
– Autopay Discount – We like the fact (and for sure you will like this too) that SoFi offers a 0.25% interest rate discount for borrowers who agree to have payments automatically deducted from their bank accounts. Although this one’s very common among student loan refinancers, we thought it still is worth including here. After all, a discount is always good, right?
– In-School Deferment – Probably this one’s the big reason that makes SoFi stand out from its competitors. It’s nice knowing that SoFi allows borrowers to defer their loans if they choose to return to graduate school either on half or full-time basis, or if they serve on active military duty. Moreover, SoFi also honours the first six months of any active grace period on any type of loan you refinance with them.
– Soft Credit Inquiry for Pre-Approval – Unlike other refinancing institutions, SoFi lets you check your APR without having to worry of your credit score getting affected. It is made possible through SoFi’s quick pre-approval process.
– Federal and Private – SoFi is able to refinance not just private loans, but as well as federal loans.
– Unemployment Deferment – If you happen to lose your job, do not worry about paying still as SoFi automatically suspends your payments. Furthermore, SoFi has a support team that will help you look for a new job. Now that is customer service at its finest, right?
– Membership Discount – If you choose SoFi in refinancing your loans, it would be a lot easier to get another loan from SoFi. Yes, you are automatically eligible to loan from them. More so, you will receive a 0.125% rate discount for being a member.
– Ability to Add a Cosigner – If you want to add a co-signer, that is definitely possible with SoFi. However, adding a co-signer may lead to longer processing of your loan. This may take additional one to weeks from the usual processing period.
– Customer Service – It is worth mentioning that SoFi has a top-notch customer service. The company uses MOHELA (Missouri Higher Education Loan Authority) to handle its student loans. Apart from that, they also have an in-house customer service team, which can be contacted via phone, email, or Twitter (@SoFiSupport). According to SoFi members, you can expect that SoFi will take care all your concerns.
Areas for Improvement
While there are so many things to like about SoFi’s refinancing product, as the saying goes, there is no such thing as perfect.
Having said that, here are some of the things that we thought as rooms for improvement specifically on refinancing with SoFi:
– Co-signer Hitches – As earlier mentioned, adding a co-signer will make the approval process longer (about one to two weeks more). As compared to other lenders, this is quite long — as other lenders are able to get it done faster.
– High Credit Standards – SoFi is known to have a reputation of having high credit standards, which the company acknowledges. If you will visit their website, they are upfront in telling people that they are “selective’. So, if you are someone without less credit score, you may not be suited for refinancing with SoFi. Also, apart from your credit score, the company also look into your education, career, as well as your estimated cash flow.
HOW TO PROCESS REFINANCING WITH SOFI?
When refinancing a student loan with SoFi, you will definitely go through a very easy process. All you need to do is complete an online pre-approval to know whether or not you are qualified for a refinancing loan. Also, you will need to choose the loan term you want and then complete the full application. If you have applicable documentation to help SoFi consider you for refinancing loan, you may upload it as well.
Furthermore, we thought it is worth sharing that if you opt to proceed with SoFi’s full loan application, the company will conduct a hard credit pull. Know that this may affect your credit score.
IMPORTANT DETAILS ON REFINANCING WITH SOFI
Now that you already know what SoFi is all about and how to process refinancing with SoFi particularly on student loans, we thought it’s just right that we share with you this vital information, too.
Interest Rates, Fees, and Terms
| Soft Credit Check
(To help check your qualification, and know the rate you will get.) |
Yes |
| Available Loan Terms | 5 years
7 years 10 years 15 years 20 years |
| Loanable Amounts | Minimum: $5,000
Maximum: Equivalent to Your Outstanding Loan Balance |
| Application/Origination Fee | None |
| Pre-Payment Penalty | None |
| Late Fees | $5 will be charged if your loan is 15 days past due |
Financial Requirements
| Minimum Credit Score | Undisclosed |
| Minimum Income Required | None
(Note: SoFi checks the borrower’s free cash flow or the amount left over after monthly expenses have been covered.) |
| Usual Credit Score of Approved Borrowers or Co-Signers | 700+ |
| Usual Income of Approved Borrowers | $100,000+ |
| Maximum Debt-to-Income Ratio | Undisclosed |
| Qualifies People Who Filed Bankruptcy | Yes, provided the bankruptcy drops off your credit report, which happens after seven years for Chapter 13 bankruptcy, and after 10 years for Chapter 7. |
Other Requirements
- Must be a U.S. citizen or holds permanent residency. Permanent residents should have more than two years until their status expires or have already filed an extension.
- Must reside in any of the 50 states
- Must hold an associate degree of higher
- Must have attended a school authorized to receive federal aid
- Have roughly 15% percentage of borrowers who have a co-signer
- Must be employed or have a job offer to start within the next 90 days
Repayment Options
– Academic Deferment
– Military Deferment
– Disability Deferment
– Reduced Payment for Medical and Dental Residents (Physicians and dentists are allowed to pay $100 per month during their residency for up to four years.)
– Forbearance (Borrowers who lose their jobs are eligible to postpone payments for three months at a time, for up to 12 months in total, provided they lose their jobs not by their fault.)
– Death or Disability Discharge (Get in touch with SoFi’s customer service for eligibility requirements.)
Repayment Preferences
– Allows greater-than-minimum payments via auto pay
– Allows biweekly payments via auto pay
Additional Perks
– Career Coaching (You will get to work with a one-on-one advisor to look for a job, plan a career transition, as well as to help improve your personal branding.)
– Community Events (i.e. workshops, social events, speaker series, etc.)
– No-Fee Investing (This is possible through the company’s wealth management platform.)
– Southwest Airlines Points Perks (Earn up to one Rapid Rewards bonus point for every $2 they refinance, up to 50,000 Rapid Rewards bonus points.)
FINAL THOUGHTS ON REFINANCING WITH SOFI
Having stated all that, we have to say that SoFi has all its right to be the industry’s leader in refinancing particularly student loans. They give so many perks that are indeed useful for any borrower. We like the fact that they are considerate — we especially commend them for giving forbearance to their borrowers — not just by postponing payment for up to 12 months, but also in helping their borrowers find a new job.
To be honest, there are just too many things to like about refinancing with SoFi as compared to its downsides. In fact, we only thought of two over a couple of positive things about refinancing with SoFi.
So, are you worried about an existing student loan that you need to pay off? Are you considering refinancing? If so, as we have said, refinancing with SoFi is definitely one is not the best option, however, you may want to check first if you qualify for their product to avoid wasting time and effort.
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