Post # 1
Hi all. I have four separate private student loans with sallie Mae, with interest rates ranging between 6-11%. I’m paying about $500 total now, monthly, which I can comfortably afford. However, like 80% of what I pay goes towards interest only, so even though I have been paying for two years, I actually still owe MORE than my original loan amounts. Plus I am scheduled to make payments for the next like 15 years!?!
I want to refinance and consolidate so I can pay them off sooner & not throw all that cash to interest. My credit has rebuilt from when I was missing payments right after college & is right around 700.
Would it be smart for me to attempt to do this before I take out a mortgage? My fiancé and I will probably be moving and purchasing a home together in about a year.
Im afraid that I will attempt to refi, get rejected, or ruin my credit right before a major home purchase. I’ve been at my job for about 7 months and make good money.. I just don’t know if I should do it now or wait?
any advice?? Thanks 🙂
Post # 3
I would try to refinance. It will probably look better on your credit than 4 loans that you only pay interest on.
Plus you have about a year so the credit inquiry won’t be as recent and won’t have as much standing on your application then.
Post # 4
I would refinance, hopefully with a lower interest rate AND payment. The mortgage company will want you to have a low debt to income ratio. Are your student loan payments your only debt payments? (according to your credit report)
Post # 5
@BluePeaches: I have three credit cards, two of which are completely paid off and one more with only $1000 left and I plan to pay that off with my taxes. I also have a car payment with about 3 years left. I’ve only missed two payments total on everything, and that was about two-three years ago..
Post # 6
Leave your credit cards open after you pay them off. That will keep your debt to credit ratio looking good.
Post # 7
Refinancing probably requires a hard pull of your credit, which may or may not be held against you come mortgage time.
Your monthly payment counts against your total debt to income ratio, which will determine how much they let you borrow. If you think you can significantly lower your payment, and put you into a different house budget you would like, it’s worth it to do it now (assuming you have excellent credit, and the hard pull won’t drop you below 750).