I am considering to help my new son-in-law to consolidate and refinance his student loans into a 5 year fixed loan by cosigning on the refinance loan. He is a high school teacher with 4 years of continuous income as a teacher since graduating college from a Title IX university and has been making 3.5 years of on-time payments to the current student loan. His loans total to 20% more than his annual income, he has no other debt, and his credit score is just above 700. He has not been able to refinance due to the income ratio to student loan debt and future earning power of a teacher's salary. We are looking for the best place to consolidate and refinance his loans with me as cosigner. I am 61 years old, with annual income that is 3.6 times the amount of his loans, and my credit score is over 800. Additionally, I own two homes with no debt and enough savings and retirement to retire anytime. In fact, my personal non-qualified retirement savings is more than 6 times the total of his loans.
Most lenders seem to look at only credit ratings and income to debt ratio. I think I read that Common Bond also takes other things into consideration. With me as cosigner, would my financial position allow us to obtain the lowest interest rate as the lenders advertise? Something in the 3.xx% range?
Which lender(s) should we pursue? SoFi, Common Bond, Earnst, Purefy, LendKey, Citizens?
I also read that going the the hard credit checks close together would not negatively impact our credit scores, since the credit bureaus would consider it just shopping around for best rate. Is this true or will it actually reduce the credit ratings. Should we apply to all of the lenders, 2-3 of them or just one.?
Looking forward to insightful responses .
May 3, 2014
Great questions Mark.
I can't really tell you which lender would be best as each lender has their own unique formula for making credit decisions. They also keep their respective formulas secret. Your case is also a little bit different because you have a borrower who might struggle on his own, but a co-signer who shouldn't have any issue getting approval. The various lenders may treat the application differently.
I'd suggest applying with at least 5 different lenders in order to make sure you are finding the best rate possible. If you head over to our refinance reviews page http://studentloansherpa.com/s.....n-reviews/ You can find links to all of the national lenders. I'd start with SoFi, CommonBond, LendKey, and Laurel Road (formerly DRB). In my experience they are the best lenders. For application number 5, I'd apply through Credible. That one application will allow you to check your rate with Earnest, Citizens, and several other lenders. All of the lenders place an emphasis on making applying easy, so if all goes to plan, I think you two can probably get everything submitted in under an hour. I know that doing all these applications will be tedious, but a fraction of a percent difference on your interest rate can make a huge difference each month.
You are absolutely right about how the credit checks work as far as your credit score. You actual have several weeks, but I think the best practice is to do it in one day. That way if there is a delay for some reason with one of the lenders pulling your credit, it will still be comfortably within your window.
Finally, I'd be very interested to know what lenders had the best deal for your situation. Sharing how things play out for you will be very helpful to others in the same situation and much appreciated.
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