Month: October 2021

Banking & Savings

Underwater Mortgage: What Is It and What Are Your Options?

Kevin Smith

Your home can be your biggest asset and a primary tool for building wealth over the long term. But like other assets you invest in, such as stocks and bonds, the value fluctuates. These fluctuations can put you underwater with your mortgage.

Here’s what you need to know about underwater mortgages and what you can do if you have one:

What is an underwater mortgage?Signs of an underwater mortgageProblems with underwater mortgagesUnderwater mortgage options

What is an underwater mortgage?

An underwater mortgage, also known as an upside-down mortgage or having negative home equity, is a home purchase loan with a principal balance that exceeds the value of the home — in other words, you owe the lender more than your home is worth.

Underwater mortgages were common during the Great Recession from 2007 to 2009, when home values throughout the country plummeted and continued to decline for several years after the recession’s end. Homeowners with purchase or refinance loans based on pre-crash home values found themselves underwater as a result.

Underwater mortgages are less common today because of tighter underwriting standards and record price increases since the pandemic. Median home prices increased nearly 25% from June 2020 to June 2021, so there’s a good chance that your home is worth more now than when you bought it.

Signs of an underwater mortgage

Situations that might push you into negative equity include a decrease in local property values. A low appraisal is also a good indicator that you might be underwater on your mortgage.

Here’s how to find out if your loan is underwater.

Figure out how much you owe

You can find out how much you owe by checking your mortgage statement. You’ll see the amount listed under “principal balance” or “outstanding principal”.

If you need to know the exact amount immediately, you’re best off calling your loan servicer and asking for your payoff amount. That figure will include interest and fees that have accrued since the lender prepared your statement.

Whether you’re researching rates or looking to buy a home, Credible is here to help. You can compare prequalified rates on home loans from all of our partner lenders in just a few minutes.

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Determine your home’s value

The only way to get an accurate opinion of value is to have your home appraised by a licensed home appraiser. A professional home appraisal is usually worth the cost if you’re hoping to sell your home. Otherwise, you can get a ballpark figure for free from a real estate portal site like Redfin or Realtor.com.

Subtract your home value from your principal balance

The final step is a simple math problem that will show whether you’re underwater:

Value – Balance = Equity

If, for example, your home is worth $200,000 and you owe $225,000 on your mortgage, the equation will look like this:

$200,000 – $225,000 = -$25,000

In this scenario, you’re $25,000 underwater on your home loan.

Problems with underwater mortgages

An underwater mortgage doesn’t always have a negative impact on a homeowner. If your mortgage is affordable and you’re not planning to sell or refinance, you might not worry about it at all. However, when that’s not the case, an underwater mortgage can put you at a serious disadvantage.

Refinancing

Lenders protect themselves against default by limiting how much of your equity you can refinance. The limit might be 80% for a cash-out refinance, for example, or 95% for a rate-and-term refinance. But if you have negative equity, you have nothing to draw against.

Even in the event you find a loan that lets you refinance 100% of your home’s value, the new loan won’t fully repay the underwater one. In that case, you’ll have to pay enough cash at closing to make up the difference.

Also See: How to Refinance Your Mortgage in 6 Easy Steps

Selling

Most mortgage loans have a due-on-sale clause that makes the loan due in full when the owner sells. In the case of an underwater mortgage, where the sale won’t cover the amount needed to pay off the loan, you’ll need enough cash at closing to make up the difference.

Foreclosure

Your lender can’t foreclose simply because you’re underwater, but being underwater increases your risk of foreclosure because it limits your options. Since you might not be able to refinance or sell the home, there’s a greater chance of your home going into foreclosure if you can no longer keep up with the mortgage payments.

Underwater mortgage options

You don’t necessarily have to take action when your mortgage is underwater, but it’s probably a good idea, even if only to ward off future problems. If you’re already struggling, a quick response can keep you from losing your home.

Stay in your home

The simplest option is to remain in your home and continue making your regular mortgage payments. By paying down your principal balance, you’ll continue to build equity. Consider making extra principal payments to pay down your loan balance faster.

You can also try to increase the value of your home. Home remodeling projects rarely generate a positive return on investment unless you can do the work yourself, but simple jobs that improve curb appeal can give your home value a boost for little cost beyond elbow grease.

Tip: If you can’t afford to make extra principal payments or remodel your home, sit tight and wait for a market cycle more favorable to sellers. This can right your mortgage naturally as values appreciate.

Refinance

Refinancing an underwater mortgage is tricky because you typically need equity to do it. However, you might be in luck if your loan is backed by Freddie Mac.

The Freddie Mac Enhanced Relief Refinance is meant for homeowners whose mortgages are underwater. This option could make your loan more affordable by lowering your mortgage rate and monthly payment or allow you to increase your equity faster with a shorter repayment period.

The program is available if you took out your home loan on or after Oct. 1, 2017, and are current with payments. Additional requirements include having had no 30-day delinquencies within the last six months and no more than one 30-day delinquency in the last year. Fannie Mae has a similar program but has paused it temporarily.

What about government-backed loans? Certain government-backed loans may still allow you to refinance if your mortgage is underwater. The FHA streamline refinance program, for instance, doesn’t require an appraisal, so you can refinance your FHA loan even if you have negative equity.

On the other hand, the VA no longer guarantees loans where the loan-to-value ratio exceeds 100%. Some lenders do set a higher cap on streamline refinances, but the cap includes closing costs and funding fees that the lender rolls into the loan. These costs can put you even further into negative equity.

Sell your home

You’ll have to meet one of two conditions to sell a home with an underwater mortgage:

Make up the difference between your loan balance and the sale price with a cash payment at closingGet permission from your lender to sell short

Unless you’re struggling to make payments, in which case you probably lack the funds to bring cash to closing, it doesn’t make sense to sell while your mortgage is underwater. But if you are struggling, a short sale can be an alternative to foreclosure.

Your lender won’t allow a short sale unless you document a hardship that’s likely to keep you from making payments for the foreseeable future, such as a job loss or disability. It can also take months before your lender approves the short sale.

In the meantime, you might rack up enough late payments that a short sale will do as much harm to your credit as a foreclosure would. And if the lender does approve the short sale, you might have to pay tax on the amount of the loan balance the lender forgives.

Walk away

Your last resort is to simply walk away from your home and let the lender foreclose on it. This option is called a strategic default because you’ll have concluded that you’re unable to stay in the home and instead plan to use the money to pay off other debt or build savings for rent.

Foreclosure will negatively impact your credit and remain on your credit report for seven years. As such, you might find it difficult to rent a home. Paying some or all of your rent upfront, though, gives you a better chance at having your rental application approved.

Important: One more option you can try before walking away is a loan modification. This is an agreement between you and your lender that changes the terms of your loan and makes your mortgage payment more affordable. Your credit might still take a hit, but it can at least help you avoid foreclosure. Talk to your lender to see if you qualify.

The post Underwater Mortgage: What Is It and What Are Your Options? appeared first on Credible.

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Financial Tips

16 Fast Weekend Projects to Boost Your Home’s Curb Appeal

Kevin Smith

Taking on projects to boost your home’s curb appeal can give you a great sense of satisfaction and boost your mood every time you see your completed work.

Here are 16 projects that aren’t expensive or time-consuming — and that you can often do yourself:

Sweep the front porchGet a new front porch matHang a decorative wreathAdd potted plants to your front porchHide your hoseEliminate weedsAdd natural mulchReplace light fixturesClean, touch up, or completely repaint your front doorClean and polish or change front door hardwarePrune flowers and shrubsPressure wash your concreteHire a tree trimmerEmbellish your garage doorStyle your mailboxAttach house numbers

1. Sweep the front porch

The fastest, cheapest thing you can do to boost your home’s curb appeal is to get out a broom and dustpan and sweep your front porch.

You’ve probably become oblivious to the dead leaves and dirt that have accumulated there, so cleaning up will make an instant difference. Everyone who walks up to your front door is sure to notice.

2. Get a new front porch mat

Now that you’ve got a clean front porch, the next simplest way to spruce it up is with a new porch mat. Chances are, you either don’t have one at all, or you have an old one that’s looking ratty.

Hit up a big box store for a simple mat or outdoor rug you can use year-round. Buy a seasonally themed mat from virtually any home goods vendor. Or order something customized from a creator on Etsy.

If you need cash for a major home improvement project, consider a cash-out refinance. Credible can help you find a great refinance rate from our partner lenders in just a few minutes — checking rates with us is free, secure, and won’t affect your credit score.

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3. Hang a decorative wreath

If you want to dress up your front door, try a wreath! You don’t have to hammer a nail into the door to hang it, either. You can use a temporary adhesive hook or an over-the-door hanger.

Choose from holiday-specific wreaths (like Halloween or Easter), seasonal wreaths to celebrate fall or spring, or year-round wreaths that look good all the time.

Front door signs, hung on the door or propped next to it, are also a simple and affordable way to make your front entrance more inviting.

Don’t Miss: 8 Popular Pandemic Home Renovations to Transform Your Space

4. Add potted plants to your front porch

Even the smallest front porch usually has room for a potted plant or two. You might go for a vibrant magenta Tradescantia zebrina or a classic green fern. Consider how much sun the plants will get: You might need shade-loving varieties. Also, keep pet safety in mind.

If you purchase plants from your local nursery, you’re almost guaranteed to get something that’s well-suited to the season and climate, but for a wider selection, you can order plants online.

Tip: If your gardening skills are nonexistent, consider a high-quality artificial plant. You might be surprised by how realistic they can look!

5. Hide your hose

Many of us have a hose in front of our house that we don’t put away because we use it so often. As convenient as this is, some form of hose storage will eliminate the visual clutter of an uncoiled hose.

If you have the right power tools, you can mount a hose holder to a wall, but if you don’t want to drill holes into your home — or you’re looking for an easier project — a hose pot will also work.

One free, temporary fix is to just unscrew your hose from the faucet and store it in the garage. This can be a good option if you just want to impress guests in the short term and aren’t looking for a long-term solution.

6. Eliminate weeds

Weeds are another nuisance that you might have stopped noticing if you see them day after day. Pulling them can be a ton of work, and it won’t work long-term unless you get all the roots out.

There are, however, natural ways to kill weeds using substances you already have around the house. Vinegar, salt, and dish soap can help you kill unwanted plants. Check online for DIY recipes and application tips.

For weeds in your lawn, adjusting your watering and mowing patterns can also help limit weed growth going forward.

7. Add natural mulch

In flower beds and gardens, a thick layer of mulch will help prevent those weeds you just pulled from growing back. Mulch’s sunlight-blocking power also retains soil moisture so you can water less and keep your plants healthy.

You’ll want to do a bit of research to determine the best kind of mulch for your plants and climate, how close to your trees and plants it can be, and which types of mulch are the safest for people and pets.

8. Replace light fixtures

Replacing your old exterior light fixtures with more modern ones can help update your home’s look. It involves some electrical work, so you may want to hire an electrician. However, if you’re comfortable learning basic electrical safety, reading instructions, and watching a few videos, replacing light fixtures can be an easy DIY job.

For an extra-fun change, use smart light bulbs in your new fixtures. You can control these via WiFi and change their color and brightness with your smartphone.

9. Clean, touch up, or completely repaint your front door

Your front door will get dirty and fade over time since it’s exposed to the elements 24/7. Sometimes, just cleaning it with a wet rag will make a big difference, but other times, your door will need a paint job to look its best.

Painting your front door a bright color that complements the other colors in your home’s exterior can make your home stand out in a good way — and potentially raise your home’s value.

The ideal way to do the job will involve removing the door and hardware, filling and sanding any cracks, painting, then reinstalling the door. But you can also paint it in place by taping off the hardware and putting down a drop cloth to prevent paint drips and spills from marring your porch.

10. Clean and polish or change front door hardware

So many things in our homes can look like they need replacement because we’ve never cleaned them properly, and door hardware definitely falls into that category. The solution is sometimes as simple as a dish soap and water mixture.

For problems that go beyond surface dirt, you’ll need to know what material the doorknob is made of. Coated or plated hardware can require different cleaning approaches than solid metal. If your door hardware has corroded due to factors like humidity or salt air, replacing it is probably the best.

Keep Reading: 10 Ways to Craft an Elegant Outdoor Space

11. Prune flowers and shrubs

You should be able to improve your curb appeal by pruning away the dead parts of your flowers, shrubs, and hedges. If you can reshape them, even better!

You might also need to pull out plants that are beyond recovery and add new ones. Planting new flowers in full bloom is a great way to quickly add color to your landscape.

12. Pressure wash your concrete

To get stains and mildew out of the hard surfaces around your home, like your patio and driveway, try pressure washing. With the right detergents and degreasers, you can remove years of grime. Best of all, it’s one of those home improvement projects you can wrap up in a day.

You can borrow a pressure washer from a neighbor or rent one from a home improvement store. Carefully follow the instructions so you don’t hurt yourself. Also, certain materials can be damaged by pressure washing, so do your research first, or hire a professional.

13. Hire a tree trimmer

Having your trees professionally trimmed can make a big difference in your curb appeal.

An arborist will know how to shape your trees to make them look their best. They can also keep your trees healthy by thinning enough branches to improve air circulation and treating any problems that might be weakening your trees.

Besides, it’s a good idea to identify trees or limbs that could be in danger of falling in a storm, then take care of them promptly. A house that’s been partially crushed by a tree is not a pretty sight.

14. Embellish your garage door

If you have a traditional raised-panel garage door, you can add decorative or “dummy” hardware to make it more attractive. These handles and hinges don’t serve any functional purpose, but do add visual interest. There are also kits that allow you to add simulated windows.

Give your door a carriage style, mid-century modern, or contemporary look to go with the rest of your home. Just make sure to install the embellishments in a way that won’t affect the door’s ability to open and close smoothly.

15. Style your mailbox

A professional might be able to build you a custom stone mailbox in a weekend, but for a more affordable DIY upgrade, you have a few options.

If you have a metal mailbox, try cleaning it and spray painting it. You can also order decals, letters, and numbers to customize your mailbox. Or perhaps landscape your mailbox by adding plants and flowers around it.

Keep in mind that you’ll need to prune them periodically, and you may not want to plant anything that attracts lots of bees (like lavender) so you don’t have to worry about getting stung when you check the mail.

16. Attach house numbers

You can make sure your address is prominently displayed on your house by replacing old house numbers or installing new ones. This is also a way to ensure that emergency services can locate your home and that someone else’s packages don’t get dropped on your doorstep. Kits are available online in all different styles.

Boosting your curb appeal is a great way to get more money when selling your home. But even if you’re not selling, sprucing up your home’s exterior will increase your pride of ownership and create a more welcoming experience for your guests. And once you see the results of your first project, you’ll probably feel inspired to do even more.

Shopping around for a home loan can be stressful. Fortunately, Credible simplifies this process and makes comparing multiple lenders easy. You can see prequalified refinance rates from our partner lenders in just a few minutes.

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Loans Serivces

What Happens to Your Mortgage When You Die?

Kevin Smith

One important aspect of estate planning is deciding what will happen to your home after you die. The answer might be fairly cut and dry if the home is fully paid for. If it’s not, though, you’ll need to consider the financial ramifications for your estate and for the person who inherits the home.

Here’s what happens to your mortgage when you die:

Who assumes a mortgage after my death?How to take over the mortgage of an inherited housePlanning ahead

Who assumes a mortgage after my death?

No one automatically assumes your mortgage after your death. Your estate executor (i.e., the person you appoint to carry out your will and manage your estate after you die) or administrator (i.e., the person a court appoints to fulfill those same duties) will continue to make payments using funds from the estate while everything is being settled.

Later, the individual who inherits the home might be able to assume the loan.

Good to know: If you’re a co-borrower or cosigner with the decedent, you don’t have to do anything to take over the mortgage because you’re already responsible for paying it. You’ll simply continue the payments. However, you should contact the mortgage servicer to inform them of the decedent’s death.

How to take over the mortgage of an inherited house

Mortgage loans have a due-on-sale clause, also called an acceleration clause, that requires the loan to be paid in full if it transfers to a new owner. However, federal law prohibits lenders from accelerating a loan in the event of a borrower’s death. Individuals who acquire ownership this way are considered “successors in interest,” and lenders must treat them as if they were the borrower.

The law allows a successor in interest to assume the loan, without having to apply or qualify, and continue making the payments. You’re also entitled to modify the mortgage to avoid foreclosure if you wish to keep the home.

What are my options as the heir of a home with a mortgage?

In the event you inherit a mortgaged home, you have several options. Which one is best depends on your personal preferences and your financial situation.

If you want to keep the house, you can:

Assume the mortgage: Federal law allows heirs to assume a decedent’s mortgage loan in many cases. As long as you’re a qualified successor in interest — someone who inherited or otherwise acquired ownership as a result of the homeowner’s death — you can take over the loan once the deed is signed over to you. The law also entitles you to modify the loan if you’re not financially capable of making the payments.Refinance the mortgage loan: You can also refinance the mortgage into a new mortgage loan as soon as the deed is signed over to you. You’ll have to apply for the loan, qualify based on your own creditworthiness, and pay any closing costs. However, refinancing could result in a lower interest rate or an extension of the time to pay off the loan — either of which can make the home more affordable.Repay the loan in full: Assuming you have the cash on hand, you can avoid mortgage issues entirely by paying the balance in full. The home would then be yours free and clear.

If you can’t or don’t want to keep the house, you can:

Sell it: The home is yours as soon as the deed has been transferred to you, so you can list it for sale just like you would a home you’d purchased yourself.Let the lender foreclose: If you don’t want the house and don’t want to sell it — a reasonable decision if you’re unlikely to sell at a profit — you can simply take no action. After a period of time with no payments, the lender will foreclose and repossess the home.

Important: Foreclosure can have tax consequences for the estate. Contact an accountant or attorney before going this route.

What happens to a reverse mortgage when you die?

The rules change when you inherit a home from someone other than a spouse with whom you are a co-borrower on the home’s reverse mortgage.

A reverse mortgage allows older homeowners to access the existing equity from their home. These loans don’t have to be paid back unless the borrower and their co-borrower spouse both die or move out of the home.

If you inherit a property with a reverse mortgage, you have the option of selling or keeping the home. The loan is not assumable, but you can keep the house by doing one of two things: paying off the balance or paying 95% of the home’s value, whichever is less.

Similarly, if you decide to sell the home, you’ll use the sale proceeds to pay off the debt owed on the loan — or an amount that’s at least 95% of the home’s value — and then pocket the remaining proceeds.

Planning ahead

A crucial step in estate planning is drafting a will detailing how you want your estate handled after you die, along with who you want to serve as the estate executor. In the event you die intestate — without a will — the court will appoint an administrator to take on that role.

When planning to bequeath a mortgaged home, it’s important that you disclose the mortgage to your executor and close relatives — otherwise they won’t know to make payments, and the home could be lost to foreclosure inadvertently.

In addition, consider whether the individual who inherits your home will be able to afford mortgage payments and upkeep. An estate or financial planner can help you devise a strategy to keep your gift from becoming a burden to your loved ones.

Compare your home loan options

Credible is a mortgage marketplace that allows you to easily compare rates and loan options. With Credible, you can secure a streamlined pre-approval letter and see loan details from all of our partner lenders in just a few minutes. We also provide transparency into lender fees that other brokers typically don’t.

Credible makes getting a mortgage easy

Instant streamlined pre-approval: It only takes 3 minutes to see if you qualify for an instant streamlined pre-approval letter, without affecting your credit.We keep your data private: Compare rates from multiple lenders without your data being sold or getting spammed.A modern approach to mortgages: Complete your mortgage online with bank integrations and automatic updates. Talk to a loan officer only if you want to.Find Rates Now

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The post What Happens to Your Mortgage When You Die? appeared first on Credible.

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Loans Serivces

FHA 203(k) Loan: What It Is, How it Works, and More

Kevin Smith

Buying a fixer-upper home instead of a turnkey property can help you save money — as long as you have the time and budget to complete the necessary repairs. However, depending on the property condition, you might struggle to qualify for a traditional home loan.

Thankfully, you can apply for an FHA 203(k) loan. This type of mortgage rehabilitation loan is easier to qualify for than a conventional home loan and can potentially help you transform your distressed property into one of the best lots in the neighborhood.

Here’s what you need to know about FHA 203(k) loans:

What is a 203(k) loan?How does a 203(k) loan work?203(k) loan types203(k) loan uses203(k) loan requirements203(k) loan process203(k) loan pros and cons

What is a 203(k) loan?

There are several FHA home loan programs available to you. Most single-family homes requiring minimal repairs are eligible for 203(b) loans — the most common FHA loan.

But when a house needs extensive work for health, safety, and/or security reasons, you may need to apply for a 203(k) mortgage instead. Also known as a Section 203(k) loan, this rehab loan lets you buy the property as-is and use funds from the loan to complete the necessary repairs. You can also refinance your existing mortgage to perform structural and cosmetic repairs to your current home.

While Credible doesn’t offer 203(k) loans, our streamlined process makes comparing rates for conventional loans easy. It only takes a few minutes to see prequalified rates and generate a streamlined pre-approval letter using our free online tools.

Credible makes getting a mortgage easy

Instant streamlined pre-approval: It only takes 3 minutes to see if you qualify for an instant streamlined pre-approval letter, without affecting your credit.We keep your data private: Compare rates from multiple lenders without your data being sold or getting spammed.A modern approach to mortgages: Complete your mortgage online with bank integrations and automatic updates. Talk to a loan officer only if you want to.Find Rates Now

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How does a 203(k) loan work?

You can purchase or refinance a home that’s at least a year old with an FHA 203(k) rehab loan. Primary residences requiring structural repairs and minor improvements are eligible for financing with a fixed or adjustable interest rate.

A Section 203(k) loan can be an excellent option as you only need to apply for one loan to secure the property and finance repairs with lenient borrower requirements.

While 203(k) loan requirements are typically more lenient than other home loans, the application process can be more tedious. For example, the lender requires a list of specific repairs, a cost estimate, and hiring a licensed contractor before you can close and make an initial draw.

Good to know: Only repairs or renovations that add value to the property will qualify. Certain luxury items like swimming pools and barbecue pits aren’t allowed. And while you may not have to occupy the home immediately, you’ll only have six months to complete the proposed projects.

203(k) loan types

There are two different 203(k) renovation loan options. Your estimated repair costs and the types of repairs determine which loan to apply for.

Limited 203(k) loan

A limited 203(k) loan — formerly known as a streamline 203(k) — allows you to borrow up to $35,000 for repairs or improvements. These loans are often better suited for cosmetic or non-structural repairs like a kitchen remodel or new flooring. Essentially, you’re performing the repairs that the seller didn’t do, allowing you to buy the house at a potential discount.

Here are some of the features of this loan type:

Cosmetic repairs only: Most minor remodels and non-structural repairs are eligible but an approved contractor must finish the work within six months. Contingency reserve: While you can borrow up to $35,000 for repairs, the lender may require a 20% contingency reserve — essentially, funds that are set aside to cover any cost overruns. For example, you might borrow $35,000 for repairs but the lender might withhold up to 20% (in this case, $7,000) in a reserve. They’re recommended, but not required, for limited 203(k) loans.Homebuyers and homeowners can apply: This loan is available to buyers and existing homeowners. However, you cannot refinance an active 203(k) loan.Self-made work plan: You may not have to work with a 203(k) consultant to draft a work plan for any repairs and improvements. However, your mortgage lender must approve the plan and the contractors you hire.

Standard 203(k) loan

If your home requires major structural repairs to get it into live-in condition, the standard 203(k) loan is a better option. This loan can also be a great alternative to construction loans when you retain the original foundation but need to rebuild or modify the existing structure.

The main features of this loan include:

Minimum $5,000 in improvements: You’ll only need to complete at least $5,000 in eligible improvements to qualify for a standard 203(k) loan.Contingency reserve: Lenders require a contingency reserve of up to 20% of the amount you borrow on all standard 203(k) loans.Complete major repairs: You can use this loan for significant repairs or remodeling as long as the original foundation exists. For example, you could rebuild the original structure or convert a single-family home into a multi-family property.Work with a 203(k) consultant: An FHA-approved 203(k) consultant must create your work plan and cost estimates. Qualified borrowers that perform their own work may be able to waive this requirement but cannot receive payment for the labor.More eligible repairs and improvements: Some repairs and improvements that aren’t eligible for funding with a limited 203(k) loan are eligible with a standard 203(k) loan. These include landscaping, structural rehabilitation, and installing storm shelter additions.

203(k) loan uses

You can use a 203(k) loan for many non-luxury repairs and improvements. Here are some ways to boost the value of your property using either 203(k) loan:

Heat and air conditioning systemsPlumbingWell or septic systemRoofingEnergy conservation improvementsSmoke detectorsExterior decks, patios, and porchesFencesWalkways and drivewaysKeep in mind: Your lender may only authorize repairs that increase the as-is property value by the same amount as the amount you spend.

203(k) loan requirements

Here are some of the FHA requirements you’ll need to meet:

Credit score: You’ll need a credit score of at least 500 to apply. However, 203(k) loan lenders may require a score above 600.Down payment: Your down payment is 10% with a credit score between 500 and 579. But you’ll only need to make a 3.5% down payment with a score of 580 or higher. Mortgage insurance premiums: You’ll pay an upfront mortgage insurance premium of 1.75% on the purchase price and repair funds. This loan also has an annual premium for the life of the loan. You can cancel the premium after 11 years if your initial down payment is 10% or higher. Employment history: You may need to provide proof of employment for the last two years. Your two most recent tax returns may also qualify. Traditional W-2 or self-employment income can qualify with a consistent work history.Debt-to-income ratio (DTI): Your maximum debt-to-income ratio is 43% in most instances. The DTI can be as high as 50% when you have qualifying income and cash reserves.Loan limits: You can borrow up to the nationwide mortgage limit or 110% of the estimated property value after improvements, whichever is less. In 2021, the mortgage limit is $356,362 in most counties for a single-family home and $822,375 in higher-cost areas.Primary residences only: 203(k) loans are only for primary residences. You must intend to live in the house for at least one year after the closing date.Must be an existing property: Your home must be at least a year old. The home can be a single-family home with one to four units, a condominium, or a manufactured house if the original foundation remains undisturbed.Closing costs: You’ll have to pay several fees including origination, appraisal, 203(k) consultant, and contractor charges.

203(k) loan process

Here is a look at how to apply for a 203(k) loan:

Apply with a 203(k) lender: Compare pre-approval rates from several mortgage lenders offering 203(k) loans. The lender can help you determine if a standard or limited 203(k) loan is better. Gather your documents: After identifying a property, apply for financing by submitting your personal, employment, and property details.Home appraisal: Your lender may require an initial inspection to determine the current property value and amount you may borrow for repairs. A 203(k) consultant can identify the necessary work items and total cost estimate.Hire a contractor: Unless you’re a professional contractor, you’ll need to hire a licensed general or specialized contractor before the loan closing date to complete the repairs. Using a contractor with previous 203(k) experience can prevent delays.Close on the loan: After hiring a qualified contractor, you can close on the loan to purchase the property and draw the initial repair funds. You’ll need to pay the closing costs, down payment, and upfront mortgage insurance premium.Complete the repairs: You have six months to complete the necessary repairs with a 203(k) loan. The work must start within 30 days of the closing date and the lender requires routine progress updates.Borrower’s letter of completion: You’ll provide the lender with a signed letter of completion stating all necessary repairs are complete to your satisfaction. Any unused funds from your contingency reserve will be applied to your loan principal.Occupy the house: You might be unable to occupy the dwelling until the necessary repairs are complete. After gaining a certificate of occupancy, you can move into your home to finalize the loan process.

203(k) loan pros and cons

These are the advantages and disadvantages of an FHA 203(k) rehab loan:

Pros

Most repairs qualify: Many minor and major repairs and improvements are eligible and can increase your property value quickly. Flexible borrower requirements: This loan type typically requires a lower credit score and down payment than conventional mortgages and construction loans. You can also apply for a 203(k) purchase or 203(k) refinance loan.Flexible borrowing limits: You can borrow up to your area’s borrowing limit or 110% of the after-repair property value.Lenient property requirements: While you must make repairs, 203(k) loans accept properties that may not pass the appraisal process for a conventional mortgage. Buying a fixer-upper at a low price can give you a tidy sum to spend on repairs and may end up being cheaper than purchasing a turnkey property.

Cons

Short repair window: You only have six months to complete the required repairs. Lenders may grant an extension for extreme circumstances. Houses with excessive damage may not qualify despite selling at a bargain price.Must hire a contractor: You’ll need to use a professional contractor to complete the work. Standard 203(k) loans also require hiring a consultant during the application process to develop a work plan. This oversight can complicate the purchase process. No investment properties: This program is strictly for primary residences that you plan on living in for at least one year. Rental homes and fix-and-flips don’t qualify.Mortgage insurance premiums: Like other FHA loans, you’ll have to pay mortgage insurance, possibly for the life of the loan. A 1.75% upfront mortgage insurance premium (UFMIP) is due at closing and an annual mortgage insurance premium (MIP) not exceeding 0.85% also applies.

The post FHA 203(k) Loan: What It Is, How it Works, and More appeared first on Credible.

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Banking & Savings

4 Ways to Determine House Value

Kevin Smith

Whether you’re thinking of buying, selling, or refinancing — or you’re just curious — you might want to know how to determine a house’s value. Fortunately, there are several ways to find out how much a house is worth, and you might get different results from each one.

Here are some options for finding the value of a home:

Online home value calculatorsComparative market analysis from a real estate agentFHFA House Price Index CalculatorProfessional appraisal

How to find the value of your home

To determine your home’s value, try one or more of these methods.

1. Online home value calculators

Online home value calculators use automated valuation models, or AVMs, to estimate how much your home is worth. These estimates are based on a wide range of property and local market data, including your home’s square footage, number of bedrooms and bathrooms, recent comparable sales, local market trends, and more.

Online valuation tools don’t account for unique features of your home that might increase or decrease its value, such as how old your roof is or when you last remodeled your kitchen. For that, you’ll need a professional appraisal.

Tip: You’ll also get different home values from different calculators because they use proprietary formulas.

Here are two home value calculators we like:

PennyMac Home Value EstimatorRedfin Home Value Estimator

If you’re in the market for a new home, you’ll want to secure a great mortgage rate for your home loan. Credible can help with this. We make comparing rates from multiple mortgage lenders easy. In just a few minutes, you can see prequalified rates and compare a wide range of loan options for free — our process is safe and secure, and checking rates with us won’t affect your credit score.

Credible makes getting a mortgage easy

Instant streamlined pre-approval: It only takes 3 minutes to see if you qualify for an instant streamlined pre-approval letter, without affecting your credit.We keep your data private: Compare rates from multiple lenders without your data being sold or getting spammed.A modern approach to mortgages: Complete your mortgage online with bank integrations and automatic updates. Talk to a loan officer only if you want to.Find Rates Now

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2. Comparative market analysis from a real estate agent

If you’re planning to hire a real estate agent to help you sell your home, you can ask them for a comparative market analysis, or CMA. They’ll look at similar, recently sold properties in your area and analyze how they compare to yours. After that, they’ll arrive at a fair market value and help you set a strategic listing price for your home.

A CMA requires a knowledgeable local agent who can assess how other homes’ characteristics contributed to their selling price, along with how your home compares and how to estimate its value accordingly.

Your agent will also need to understand nuances such as how much buyers in your area will devalue a property that backs up to a major road or how much value a screened-in patio adds.

See: How to Increase Your Home Value: Complete Guide

3. FHFA House Price Index Calculator

The Federal Housing Finance Agency’s (FHFA) House Price Index (HPI) Calculator is an online tool that can tell you how the estimated value of a home in a given metropolitan statistical area (MSA) may have changed since you purchased it. Its calculations are based on the percentage change in home values in the MSA during that time span.

The FHFA’s HPI calculator is not likely to be useful to an individual who is buying or selling a home. That’s because the values it provides are based on averages, and it can’t tell you the actual value of a specific house. Homes within the same MSA can have wildly different values because an MSA encompasses such a large area. The HPI doesn’t account for neighborhood conditions or a specific home’s attributes.

This tool, and all the data behind the HPI, might help you out if you’re a researcher or an economist, or if you simply want a quick overview of how property values have trended in the area over the years. But if you’re looking for a more accurate valuation of your home, we’d recommend going with a professional appraisal.

4. Professional appraisal

Hiring a professional appraiser costs several hundred dollars but is often the best way to get the most accurate value for your home. That’s why mortgage lenders often require a home appraisal before they’ll approve your mortgage application.

Good to know: Lenders do sometimes rely on AVMs to save time and money or even waive the appraisal for a refinance or second mortgage.

Here are some of the factors appraisers take into account when establishing a value for your home:

LocationSquare footageInterior and exterior conditionNumber of bedrooms and bathroomsLot sizeAge of the homeHeating and coolingUpdates and renovations (such as a new garage door or hardwood floors)Neighborhood and surrounding propertiesHome designCurrent market conditions

What is home value?

There’s more than one way to determine a home’s value. Here are three valuation methods for residential real estate and the different purposes they serve.

Fair market value

Fair market value is how much someone is willing to pay for your home. It’s based on supply and demand and explains why old mansions in Midwestern cities with major population losses can cost less than starter homes in bustling West Coast cities.

Fair market value assumes that the seller isn’t giving the buyer any breaks on the price, and that the buyer has a solid understanding of the property’s characteristics.

ppraised value

Appraised value is how much your home is worth for lending purposes. It’s determined by a state-licensed appraiser.

The appraised value may be higher or lower than fair market value. If it’s lower, the seller will need to lower the price. Otherwise the borrower will need to increase their down payment to gain mortgage approval and close the deal.

Tip: Appraisers try to be objective, but can make mistakes or be biased. You can challenge a low home appraisal with solid data.

ssessed value

Assessed value is how much your home is worth for property tax purposes. To find the assessed value of your home, you can look at your property tax statement or contact your local property tax assessor.

Some jurisdictions even have websites where anyone can look up a property’s assessed value. Assessed value may be less than the property’s current fair market value. Common reasons for this include homeowners exemptions and statutory limits on annual property tax increases.

Keep Reading: Property Tax Assessment: What It Is and What It Means

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Real Estate

How to Shop for a Mortgage

Kevin Smith

You might feel like you’re ready to buy a home, but in addition to hunting for the perfect property, you’ll likely need to shop for the right mortgage loan before you commit to that purchase.

Knowing how to shop for a mortgage and compare offers can help you find the home loan that fits your situation and potentially save you thousands of dollars.

Here are some important things to consider when you’re shopping for a mortgage:

Consider mortgage typesCheck your credit scoreReview your credit reportExplore different financing optionsShop around for best ratesGet pre-approved

1. Consider mortgage types

A mortgage loan allows you to borrow the funds needed to buy a home. Understanding the features and requirements of each major mortgage program can help you figure out which one is right for your situation.

Most mortgages require a minimum down payment, usually around 3% to 5% of the sale price, and a minimum credit score.

If you’re looking for a great mortgage rate, Credible’s streamlined process can help. We make comparing multiple mortgage lenders easy. In just a few minutes, you can see prequalified rates all without leaving our platform.

Credible makes getting a mortgage easy

Instant streamlined pre-approval: It only takes 3 minutes to see if you qualify for an instant streamlined pre-approval letter, without affecting your credit.We keep your data private: Compare rates from multiple lenders without your data being sold or getting spammed.A modern approach to mortgages: Complete your mortgage online with bank integrations and automatic updates. Talk to a loan officer only if you want to.Find Rates Now

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Conventional loan

Conventional loans are mortgages offered by private banks, credit unions, and mortgage lenders but aren’t backed by government institutions. Instead, conventional loans are typically backed by Fannie Mae and Freddie Mac, two agencies that purchase mortgages and set borrower qualification requirements.

To get a conventional loan, you usually must pay at least 3% to 5% of the home’s purchase price as a down payment. You’ll also need a credit score of around 620 or higher, and the loan amount must follow conforming loan limits.

FHA loan

An FHA loan is a mortgage that’s funded by a bank, credit union, or other mortgage lender but insured by the Federal Housing Administration (FHA).

The government guarantee allows mortgage lenders more flexibility here, so you might qualify with a credit score of 580 if you can put down at least 3.5%. With a credit score in the 500 to 579 range, you’d need a down payment of 10% or more.

VA loan

VA loans are funded by private lending institutions and backed by the U.S. Department of Veterans Affairs. These mortgages are available to eligible members of the armed forces, veterans, and surviving spouses.

If you qualify, you could get approved for a mortgage with a 0% down payment and no mortgage insurance, though you’ll typically need to pay a funding fee. The VA doesn’t set minimum credit score requirements, but your lender may have its own limit.

USDA loan

USDA loans are guaranteed by the U.S. Department of Agriculture. These loans are designed for low-income borrowers who plan to purchase a home in a USDA-designated rural area.

You won’t have to make a down payment on a USDA loan, but you’ll be responsible for paying an upfront fee and an annual fee.

Keep Reading: What Is a Mortgage? Everything to Know About Home Loans

2. Check your credit score

When you apply for a mortgage, lenders typically pull your credit scores from all three major credit bureaus: TransUnion, Equifax, and Experian. Your credit scores help lenders predict how likely you are to repay a loan. As such, it factors into whether you’ll qualify for a mortgage and the loan terms you’ll receive.

All three of your credit scores may differ, so the lender will order the scores from lowest to highest and use the middle score to determine loan qualification. So, for example, if your scores are 620, 630, and 640, the lender may use 630 to make a lending decision.

A higher credit score — usually in the mid-700s and above — can help you get a good mortgage rate and potentially save you thousands of dollars in interest over the life of the loan. It may also help you qualify for more mortgage programs and a lower down payment requirement.

Tip: If your credit needs work, you may want to pause your mortgage search for a few months and focus on improving your credit score.

3. Review your credit report

Lenders will also review your credit reports, which are documents that capture the details of your credit history. Many consumers have a credit report with each of the three major credit bureaus.

Your credit report includes a list of credit accounts opened in your name, such as credit cards and student loans, plus the following:

Payment historyMonthly minimum paymentBalance informationWhether the account is in good standing

Lenders use the information in your credit report to:

Find your monthly financial obligations, which impacts your debt-to-income ratioLook for signs of loan delinquency, such as missed paymentsCheck for red flags, such as bankruptcy or foreclosure

Tip: Credit scoring companies, such as FICO and VantageScore, use the information in your credit reports to calculate your credit scores. Unfortunately, mistakes on credit reports are common — and these errors may affect your credit score and your ability to qualify for a mortgage.

So, before applying for a mortgage, check your credit reports and dispute any mistakes. You can pull your credit reports for free once a year at AnnualCreditReport.com.

4. Explore different financing options

A mortgage lender — such as a bank or credit union — is the company that funds your home loan. Each lender offers different loan programs and sets different borrower requirements. It’s important that you get quotes from several types of mortgage lenders to find one that offers the best loan program for you.

Banks

Banks are for-profit financial institutions that typically offer a number of different products such as mortgages, credit cards, checking and savings accounts, and more. Many large banks have branches nationwide or throughout a specific region where you can get in-person support, and they also might offer a wider selection of mortgage products.

One downside to banks is that they tend to charge slightly higher interest rates on home loans compared to credit unions, according to a side-by-side comparison by the National Credit Union Administration.

Credit unions

Credit unions are nonprofit organizations that offer banking services to their members. In addition to offering lower interest rates on mortgages and other financial products, credit unions have historically earned the highest customer satisfaction ratings.

However, you’ll need to join a credit union to get a mortgage. Some credit unions are open to anyone, but others may require you to work in a certain industry or live in a certain area.

Other mortgage lenders

You might also find a home loan with another type of lender. For instance, online lenders, such as Rocket Mortgage, offer an end-to-end digital process. You may be able to get pre-approved, upload loan documents, and close on the loan all online. By saving money on overhead costs, online lenders may also be able to offer lower rates or special discounts.

5. Shop around for best rates

Getting rate quotes from multiple lenders and comparing offers is one of the easiest ways to save money on your mortgage. That’s because the interest rate is one of the key components of the mortgage’s total cost, and rates can vary considerably with each lender. Despite this, about half of homebuyers skip shopping for the best rate.

According to the Consumer Financial Protection Bureau, borrowers could save $300 a year on average by shopping for more than one rate quote. You might save even more, depending on what you qualify for.

Example: Let’s say you get rate quotes from two different lenders on a $200,000 home loan, and you compare the monthly principal and interest payments on each. With a 3% interest rate, you save $44 per month compared to the same loan with a 3.5% rate. That might not sound like much, but it adds up to $528 in savings per year or $15,840 over a 30-year term.

Get Started: Find Your Mortgage Rate Today

6. Get pre-approved

A pre-approval is a letter from a mortgage lender that shows how much you’re qualified to borrow. This can help you set a homebuying budget and strengthen your purchase offer when you find a home you want to buy.

To start the process, you can contact a lender and ask for a pre-approval. They’ll pull your credit, look over your financial documents, and gauge how much money you have for a down payment. If you fit qualification requirements, the lender will hand you a mortgage pre-approval letter.

Getting pre-approved with Credible: With Credible, you can generate a streamlined pre-approval letter based on your unique situation. It only takes a couple of minutes to see loan details from all of our partner lenders. We also provide transparency into lender fees that other brokers typically don’t.

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Real Estate

Construction Loans: What They Are and How They Work

Kevin Smith

Building a home gives you an opportunity to have everything you could possibly want in a home — within your budget, of course. You don’t have to be rich to make it happen, you just have to qualify for a construction loan.

Construction loans are different from traditional mortgages. For one, a traditional mortgage is a long-term loan that helps you pay for an existing home, whereas a construction loan is a short-term loan that pays for the building of a new home and can convert into a traditional mortgage once the building process is completed.

Here’s what you need to know about the different types of construction loans and how they work:

What is a construction loan?What does a construction loan cover?How do construction loans work?Construction loan ratesConstruction loan typesHow to get a construction loanIs it hard to get a construction loan?How to choose a construction loan lender

What is a construction loan?

A construction loan allows you to borrow money to build or renovate a home.

When you buy a move-in ready home, the mortgage only needs to cover the purchase price and sometimes the closing costs.

When you build a home (or buy a home you want to overhaul), there are more steps involved: buying land, paying contractors, passing inspections. This more complicated process warrants a different type of loan.

Learn More: How Much It Costs to Renovate a House

What does a construction loan cover?

Construction loans pay for costs like:

LandArchitectural plansDesign feesBuilding permitsConstruction materialsContractor laborContingency reserves (in case your project goes over budget)Interest reserves (to cover your interest expenses during construction)Closing costsLong-term financing once construction is complete

How do construction loans work?

A construction loan is designed to pay for work in stages. This arrangement, called a “draw schedule,” reduces the risk to both the borrower and the lender that the builder will get a huge sum up front and fail to complete the work.

It also reduces the risk of shoddy work, as the lender will require inspections after each phase of building before releasing more funds. In fact, construction lenders require borrowers to work with experienced builders that do a high volume of work and that are financially sound, licensed, and insured.

While you won’t find construction loans at Credible, we can help you secure a competitive rate on your next conventional mortgage. In just a few minutes, you can compare loan options from all of our partner lenders — it’s easy and free.

Credible makes getting a mortgage easy

Instant streamlined pre-approval: It only takes 3 minutes to see if you qualify for an instant streamlined pre-approval letter, without affecting your credit.We keep your data private: Compare rates from multiple lenders without your data being sold or getting spammed.A modern approach to mortgages: Complete your mortgage online with bank integrations and automatic updates. Talk to a loan officer only if you want to.Find Rates Now

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Construction loan rates

Construction loan interest rates vary by lender, but can be similar to existing home loan rates or a few percentage points higher. Having a strong borrower profile (such as an excellent credit score and debt-to-income ratio) and working with a lender that specializes in construction loans will help you qualify for the best possible rate.

Construction loans can have either a fixed or variable interest rate during the construction phase. If you choose a construction loan with a variable interest rate, it’s important to understand the range within which your interest rate can fall and when you’ll be able to lock the rate on your permanent (post-construction) mortgage. That said, permanent loans can have adjustable rates, too.

If you don’t want that uncertainty, seek out a construction-to-permanent loan with a fixed rate so that the rate stays the same during the construction phase and permanent phase.

Learn More: How Much Does It Cost to Build a House in 2021?

Construction loan types

There are several types of construction loans. Learn which type might be right for you.

Renovation loan

A renovation loan is a type of construction loan that helps you buy an existing home and pay for any major structural and aesthetic changes. Examples of renovation loans include the FHA 203(k) loan and the Fannie Mae HomeStyle loan.

The key difference between a renovation loan and a regular purchase loan is that it gives you money to buy the home as well as to fix it up. This may mean borrowing more money than the home is currently worth.

Good to know: Real estate investors will often use a renovation loan to buy a fixer-upper. The idea is to bring the home’s value up through renovations, ideally to a higher value than the amount borrowed for instant equity.

Construction-to-permanent loan

Similar to a renovation loan, a construction-to-permanent loan combines what would normally be two loans. It gives you both money to build the home and the long-term financing to pay for the home over time.

Instead, you’ll have one loan with one closing, one appraisal, and one set of closing costs. Plus, you’ll only have to qualify once. If your financial situation changes while your home is being built, you’ll still be able to move in.

Good to know: You’ll make interest-only loan payments during construction (or borrow extra to cover this expense) and principal and interest payments after construction.

A construction-to-permanent loan will also allow you to finance the purchase of the land if you don’t already own it. Or, if you have an existing lot loan, you can use a construction-to-permanent loan to pay it off.

FHA construction loan

Borrowers with smaller down payments and lower credit scores may want to consider an FHA construction loan. These loans require a borrower contribution of just 3.5%. You can use your land equity toward your down payment if you’ve already purchased the land you’ll be constructing your home on.

The FHA’s construction loan has a single closing (meaning it’s a construction-to-permanent loan) and doesn’t require you to make any payments during the construction process. The interest rate may be fixed or variable during construction.

The FHA also allows you to be the homebuilder if you’re a licensed general contractor. The minimum credit score to qualify tends to be 620 or 640, depending on the lender.

Important: FHA loans come with additional fees, including upfront mortgage insurance and monthly mortgage insurance premiums.

VA construction loan

Qualifying military service members with VA loan eligibility may want to consider a VA construction loan to build a home. These loans allow up to 100% financing that covers both the land and home construction.

The VA guarantees two types of construction loans:

One-time close loan (construction-to-permanent)Two-time close loan (a construction loan followed by a separate permanent loan)

As its name suggests, a two-time close loan involves two separate closings and, in turn, requires you to pay two sets of closing fees.

When you get a VA construction loan, you won’t make any payments during the construction phase. Instead, your loan term will be shortened by the length of the construction period. If it takes a year to build your home, you’ll pay it off over 29 years instead of 30.

Good to know: You must use a registered VA builder. Lenders are allowed to charge a construction fee of up to 2% of the loan amount plus a 1% origination fee.

The VA requires the builder to cover a number of fees that borrowers might pay on other construction loans, such as loan interest during construction, inspection fees, and hazard insurance premiums. Like other VA loans, the veteran must pay a VA funding fee.

Owner-builder construction loan

If you’re a professional builder and want to construct your own home, you can get an owner-builder loan by proving that you’re experienced, licensed, insured, and have a financially sound business. You’ll also need to meet the standard personal financial requirements.

This type of loan may be attractive if you want the cost savings, control, and personal satisfaction of building your home yourself.

Tip: The VA doesn’t guarantee this type of construction loan, but the FHA does. You can also get an owner-builder construction loan from a private lender.

One-time close construction loan

A one-time close construction loan (also called a single-close construction loan or construction-to-permanent loan, as discussed above) is any construction loan where a single loan covers your entire project. For example, a VA construction loan can also be a one-time close construction loan.

Over the months it takes to build your home, your financial situation and interest rates may change. These changes can affect loan costs and your ability to qualify for a permanent loan. In addition, each loan requires its own down payment, underwriting, and closing costs.

Tip: A single-closing loan can save you a lot of time, money, and uncertainty. Without this type of loan, you might need three loans: one loan to finance the lot, a second loan to build the home, and a third loan to pay off the first two loans plus the home itself.

Learn More: Buying New Construction: Pros, Cons, Step-by-Step Guide

How to get a construction loan

Like with any home loan, you’ll need to meet a certain set of requirements to obtain a construction loan. Requirements vary by lender and by the type of construction loan you’re applying for.

Construction loan requirements

In general, here are the criteria you’ll want to meet to qualify for a construction loan:

Credit score: You’ll want to have a credit score of at least 620 to qualify for an FHA or VA construction loan. For a Fannie Mae single-close loan, the minimum credit score is 700.Down payment: For a conventional construction loan, you may need a down payment of as little as 5%. Sometimes you’ll need 10% to 20% of the sales price (land plus construction costs) or equity from your land value. An FHA construction loan requires a down payment of 3.5%, while a VA construction loan doesn’t have any down payment requirement.Debt-to-income ratio: Your DTI should be 43% or lower. A higher ratio may be allowed if you otherwise have strong finances.Repayment plan: Construction loans usually require no payments or interest-only payments during the construction phase. You’ll make fully amortizing principal and interest payments once construction is complete.

Steps to get a construction loan

Here’s how to get a construction loan:

Get pre-approved with a construction loan lender.Sign a contract with a builder. Make sure it has a loan contingency so you can exit the contract if you can’t finalize your construction loan.Submit your builder contract and the usual underwriting documents to your lender for approval. If you already own the land you will be building on, submit a copy of the deed, survey, and, if you bought the land recently, the settlement statement.Get a “subject to completion” appraisal for your proposed home.Get final approval and close on your construction loan.

After closing, construction can begin. Your lender will pay your builder through a series of disbursements and will inspect each phase of work.

Once construction is complete, your construction loan will be modified to a permanent loan or you’ll obtain permanent financing.

Is it hard to get a construction loan?

It shouldn’t be hard to qualify for a construction loan if you’re working with a reputable builder and you have a strong financial profile.

However, there are more steps in the qualification process, so it can be more involved and take longer than qualifying for a traditional mortgage.

How to choose a construction loan lender

The first thing you should look for when choosing a construction lender is expertise with construction loans. A lender that processes a high volume of construction loans and understands their intricacies will be easier to work with.

Chances are you have never built a home before, so you’ll want to choose a lender who can help you manage the construction process most effectively. A lender who has gone through the homebuilding experience numerous times will have a strong sense of how the process is supposed to work, what can go wrong and how to avoid problems. They can help you make sure your build gets done correctly.

The post Construction Loans: What They Are and How They Work appeared first on Credible.

Loans Serivces

13 Best Loans for Refinancing Student Loans Without a Cosigner

Kevin Smith

Refinancing your student loans with a cosigner could improve your approval chances as well as possibly get you a lower interest rate than you’d get on your own.

However, you don’t have to refinance with a cosigner if you meet the lender’s underwriting criteria on your own.

If you’re wondering how to refinance student loans without a cosigner, here’s what you should know:

Best lenders for refinancing without a cosignerOther student loan refinancing lenders to considerHow to refinance student loans without a cosignerPros of not using a cosigner when refinancingCons of not using a cosigner when refinancingHow cosigner release worksFrequently asked questions about refinancing without a cosigner

Best lenders for refinancing without a cosigner

If you’re thinking about refinancing your student loans without a cosigner, it’s important to compare as many lenders as possible first. This way, you can find the right loan for your situation.

Keep in mind: You’ll generally need good to excellent credit to get approved for refinancing — especially if you don’t have a cosigner. A good credit score is usually considered to be 700 or higher.

There are also some lenders that offer student loan refinancing for bad credit. But these loans typically come with higher interest rates compared to good credit loans.

Here are Credible’s partner lenders that don’t require a cosigner for refinancing:

LenderFixed rates from (APR)Variable rates from (APR)Loan terms (years)Loan amountsOffer Cosigner Release?

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
4.54%+N/A10, 15, 20$7,500 up to $200,000
(larger balances require special approval)Yes, after 36 monthsFixed APR:
4.54%+Variable APR:
N/AMin. credit score:
Does not discloseLoan amount:
$7,500 up to $500,000Loan terms (years):
10, 15, 20Max. undergraduate loan balance:
$250,000 – $500,000Time to fund:
4 monthsRepayment options:
Immediate repayment, forbearance, loans discharged upon death or disabilityFees:
NoneDiscounts:
AutopayEligibility:
Must be a resident of KentuckyCustomer service:
PhoneSoft credit check:
NoCosigner release:
After 36 monthsLoan servicer:
Kentucky Higher Education Student Loan CorporationMax. graduate loan balance:
$250,000 – $500,000Credible Review:
Advantage Education Loan reviewOffers Parent PLUS Refinancing :
Yes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
2.15%+
1.87%+5, 7, 10, 15, 20$10,000 up to $250,000
(depending on degree)NoFixed APR:
2.15%+Variable APR:
N/AMin. credit score:
Does not discloseLoan amount:
$10,000 to $400,000Loan terms (years):
5, 7, 10, 15, 20Repayment options:
Military deferment, forbearanceFees:
Late feeDiscounts:
AutopayEligibility:
Must have a credit score of at least 720, a minimum income of $60,000, and must be a resident of TexasCustomer service:
Email, phoneSoft credit check:
Does not discloseCosigner release:
NoLoan servicer:
Firstmark ServicesMax. Undergraduate Loan Balance:
$100,000 – $149,000Max. Graduate Loan Balance:
$200,000 – $400,000Offers Parent PLUS Refinancing:
Does not disclose

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
2.44%+1
2.24%+15, 7, 10, 15, 20$10,000 to $500,000
(depending on degree and loan type)Yes, after 36 monthsFixed APR:
2.44%+1Variable APR:
2.24%+1Min. credit score:
Does not discloseLoan amount:
$10,000 to $750,000Loan terms (years):
5, 7, 10, 15, 20Repayment options:
Immediate repayment, academic deferment, military deferment, forbearance, loans discharged upon death or disabilityFees:
Late feeDiscounts:
Autopay, loyaltyEligibility:
Must be a U.S. citizen or permanent resident and have at least $10,000 in student loansCustomer service:
Email, phone, chatSoft credit check:
YesCosigner release:
After 24 to 36 monthsLoan servicer:
Firstmark ServicesMax. Undergraduate Loan Balance:
$100,000 to $149,000Max. Graduate Loan Balance:
Less than $150,000Offers Parent PLUS Refinancing:
Yes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
2.99%+2
2.94%+25, 7, 10, 12, 15, 20$5,000 to $300,000
(depending on degree type)Yes, after 24 monthsFixed APR:
2.99%+2Variable APR:
2.94%+2Min. credit score:
Does not discloseLoan amount:
$5,000 to $300,000Loan terms (years):
5, 7, 10, 12, 15, 20Repayment options:
Military deferment, forbearance, loans discharged upon death or disabilityFees:
Late feeDiscounts:
AutopayEligibility:
All states except for MECustomer service:
Email, phone, chatSoft credit check:
YesCosigner release:
After 24 to 36 monthsLoan servicer:
College Ave Servicing LLCMax. Undergraduate Loan Balance:
$100,000 to $149,000Max. Graduate Loan Balance:
Less than $300,000Offers Parent PLUS Refinancing:
Yes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
2.16%+
2.11%+5, 7, 10, 15, 20$5,000 to $500,000Yes, after 36 monthsFixed rate:
2.44%+1Variable rate:
2.24%+1Min. credit score:
680Loan amount:
$5,000 to $500,000Cosigner release:
YesLoan terms (years):
5, 7, 10, 15, 20Repayment options:
Academic deferment, forbearance, loans discharged upon death or disabilityFees:
Late feeDiscounts:
AutopayEligibility:
Available in all states, except MS and NVCustomer service:
Email, phone, chatSoft credit check:
YesLoan servicer:
FirstMarkMax. undergraduate loan balance:
$500,000Max. graduate loan balance:
$500,000Offers Parent PLUS refinancing:
YesMin. income:
$65,000 (for 15- and 20-year products)

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>

1.8%+5
1.8%+55, 10, 15, 20$1,000 to $250,000Yes, after 36 monthsFixed APR:
1.8%+5Variable APR:
1.8%+5Min. credit score:
700Loan amount:
$7,500 to $200,000Loan terms (years):
5, 10, 15, 20Repayment options:
Immediate repayment, academic deferment, forbearance, loans discharged upon death or disabilityFees:
NoneDiscounts:
AutopayEligibility:
Must be a U.S. citizen or permanent resident and submit two personal referencesCustomer service:
Email, phoneSoft credit check:
YesCosigner release:
After 36 monthsLoan servicer:
Granite State Management & Resources (GSM&R)Max. Undergraduate Loan Balance:
$150,000 to $249,000Max. Graduate Loan Balance:
$150,000 to $199,000Offers Parent PLUS Refinancing :
Yes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
2.47%+3
2.39%+35, 7, 10, 12, 15, 20Minimum of $15,000NoFixed APR:
2.47%+3Variable APR:
2.39%+3Min. credit score:
680Loan amount:
No maximumLoan terms (years):
5, 7, 10, 12, 15, 20Repayment options:
ForbearanceFees:
NoneDiscounts:
NoneEligibility:
Must be a U.S. citizen or permanent resident, have at least $15,000 in student loan debt, and have a bachelor’s degree or higher from an approved schoolCustomer service:
Email, phoneSoft credit check:
YesCosigner release:
NoLoan servicer:
MohelaMax. Undergraduate Loan Balance:
No maximumMax. Graduate Loan Balance:
No maximumOffers Parent PLUS Refinancing:
Yes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
3.47%+4
2.44%+45, 10, 15, 20$5,000 to $250,000Yes, after 48 months of on-time paymentsFixed APR:
3.47%+4Variable APR:
2.44%+4Min. credit score:
670Loan amount:
$5,000 to $250,000Loan terms (years):
5, 10, 15, 20Repayment options:
Academic deferment, military deferment, forbearanceFees:
Late feeDiscounts:
AutopayEligibility:
Must be U.S. citizen or permanent residentCustomer service:
Email, phone, chatSoft credit check:
YesCosigner release:
YesMax undergraduate loan balance:
$250,000Max graduate loan balance:
$250,000Offers Parent PLUS refinancing:
Yes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
2.24%+7N/A5, 7, 10, 12, 15, 20Up to $300,000Yes, after 24 monthsFixed APR:
2.24%+7Variable APR:
N/AMin. credit score:
670Loan amount:
Up to $300,000Loan terms (years):
5, 7, 10, 15, 20Time to fund:
Usually one business dayRepayment options:
Academic deferral, military deferral, forbearance, death/disability dischargeFees:
NoneDiscounts:
AutopayEligibility:
Available in all 50 statesCustomer service:
Email, phoneSoft credit check:
YesCosigner release:
After 24 monthsMax. undergraduate loan balance:
$300,000Max. graduate balance:
$300,000Offers Parent PLUS loans:
YesMin. income:
None

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
3.05%+
3.05%+7, 10, 15$10,000 up to the total amount of qualified education debt NoFixed APR:
3.05%+Variable APR:
3.05%+Min. credit score:
670Loan amount:
$10,000 up to the total amountLoan terms (years):
7, 10, 15Repayment options:
Military deferment, loans discharged upon death or disabilityFees:
NoneDiscounts:
NoneEligibility:
Must be a U.S. citizen or permanent resident and have at least $10,000 in student loansCustomer service:
Email, phoneSoft credit check:
YesCosigner release:
NoLoan servicer:
AESMax. Undergraduate Loan Balance:
No maximumMax. Gradaute Loan Balance:
No maximumOffers Parent PLUS Refinancing:
Yes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
2.89%+N/A5, 8, 12, 15$7,500 to $300,000Yes, after 12 monthsFixed APR:
2.89%+Variable APR:
N/AMin. credit score:
670Loan amount:
$7,500 to $300,000Loan terms (years):
5, 8, 12, 15Repayment options:
Does not discloseFees:
NoneDiscounts:
NoneEligibility:
Must be a U.S. citizen and have and at least $7,500 in student loansCustomer service:
Email, phone, chatSoft credit check:
YesCosigner release:
After 12 monthsLoan servicer:
PenFedMax. Undergraduate Loan Balance:
$300,000Max. Graduate Loan Balance:
$300,000Offers Parent PLUS Refinancing:
Yes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
3.29%+N/A5, 10, 15$7,500 up to $250,000
(depending on highest degree earned) NoFixed APR:
3.29%+Variable APR:
N/AMin. credit score:
680Loan amount:
$7,500 to $250,000Loan terms (years):
5, 10, 15Repayment options:
Academic deferment, military deferment, forbearance, loans discharged upon death or disabilityFees:
NoneDiscounts:
AutopayEligibility:
Available in all 50 states; must also have at least $7,500 in student loans and a minimum income of $40,000Customer service:
Email, phoneSoft credit check:
Does not discloseCosigner release:
NoLoan servicer:
Rhode Island Student Loan AuthorityMax. Undergraduate Loan Balance:
$150,000 – $249,000Max. Graduate Loan Balance:
$200,000 – $249,000Offers Parent PLUS Refinancing:
Yes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>
2.49%+6
2.25%+65, 7, 10, 15, 20$5,000 up to the full balance of your qualified education loans NoFixed APR:
2.49%+6Variable APR:
2.25%+6Min. credit score:
Does not discloseLoan amount:
$5,000 up to the full balanceLoan terms (years):
5, 7, 10, 15, 20Repayment options:
Academic deferment, military defermentFees:
NoneDiscounts:
Autopay, loyaltyEligibility:
Available in all 50 statesCustomer service:
Email, phone, chatSoft credit check:
YesCosigner release:
NoMax undergraduate loan balance:
No maximumMax graduate loan balance:
No maximumOffers Parent PLUS refinancing:
YesAll APRs reflect autopay and loyalty discounts where available | 1Citizens Disclosures | 2College Ave Disclosures | 5EDvestinU Disclosures | 3 ELFI Disclosures | 4INvestEd Disclosures | 7ISL Education Lending Disclosures | 6SoFi Disclosures

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Trustpilot

dvantage

Best for: Parents who want to transfer PLUS Loans to their children

With Advantage, you can refinance loan amounts from $7,500 to $500,000 (depending on your degree and loan type) with repayment terms from 10 to 20 years.

Advantage is also one of the few lenders that allow parents to refinance Parent PLUS Loans into their child’s name.

advantage education loan student loan refinance
3.0
Credible rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


Rates and terms


Fees and Discounts


Customer Experience


Advantage Education Loan Student Loan Refinancing


Fixed APR


Lowest fixed rate available from this lender
4.54%+


Variable APR


Lowest variable rate available from this lenderN/A


Min. credit score


Minimum credit score needed to qualifyDoes not disclose


Loan amount


Range needed to refinance with this lender$7,500 up to $500,000

Does refinancing make sense for you?

Compare offers from top refinancing lenders to determine your actual savings.

Check Personalized Rates>Checking rates won’t affect your credit scoreView DetailsFixed APR:
4.54%+Variable APR: N/AMin. credit score: Does not discloseLoan amount: $7,500 up to $500,000Loan terms (years): 10, 15, 20Max. undergraduate loan balance: $250,000 – $500,000Time to fund: 4 monthsRepayment options: Immediate repayment, forbearance, loans discharged upon death or disabilityFees: NoneDiscounts: AutopayEligibility: Must be a resident of KentuckyCustomer service: PhoneSoft credit check: NoCosigner release: After 36 monthsLoan servicer: Kentucky Higher Education Student Loan CorporationMax. graduate loan balance: $250,000 – $500,000Credible Review: Advantage Education Loan reviewOffers Parent PLUS Refinancing : Yes

Pros

0.25% autopay discountCan transfer Parent PLUS Loans to studentGraduated repayment plan offered

Cons

$18,000 minimum income requirementDoesn’t offer variable ratesLong cosigner release period (36 months)

Learn More: Best Companies to Refinance Parent Plus Loans

Brazos

Best for: Borrowers who live in Texas

If you’re a Texas resident, Brazos could be a good option for refinancing. With Brazos, you can refinance $10,000 to $400,000 (depending on your degree) with terms from five to 20 years.

brazos student loan refinance
4.4
Credible rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


Rates and terms


Fees and Discounts


Customer Experience


Brazos Student Loan Refinancing


Fixed APR


Lowest fixed rate available from this lender
2.15%+


Variable APR


Lowest variable rate available from this lenderN/A


Min. credit score


Minimum credit score needed to qualifyDoes not disclose


Loan amount


Range needed to refinance with this lender$10,000 to $400,000

Does refinancing make sense for you?

Compare offers from top refinancing lenders to determine your actual savings.

Check Personalized Rates>Checking rates won’t affect your credit scoreView DetailsFixed APR:
2.15%+Variable APR: N/AMin. credit score: Does not discloseLoan amount: $10,000 to $400,000Loan terms (years): 5, 7, 10, 15, 20Repayment options: Military deferment, forbearanceFees: Late feeDiscounts: AutopayEligibility: Must have a credit score of at least 720, a minimum income of $60,000, and must be a resident of TexasCustomer service: Email, phoneSoft credit check: Does not discloseCosigner release: NoLoan servicer: Firstmark ServicesMax. Undergraduate Loan Balance: $100,000 – $149,000Max. Graduate Loan Balance: $200,000 – $400,000Offers Parent PLUS Refinancing: Does not disclose

Pros

0.25% autopay discountVariety of repayment terms offeredForbearance options available for economic hardship, active-duty military service, or natural disaster

Cons

Only available in TexasCould be hard to qualify if you don’t have good credit$60,000 minimum income requirement without a cosigner

Citizens

Best for: Borrowers who already have an account with Citizens

With Citizens, you can refinance loan amounts from $10,000 to $750,000 (depending on your degree and loan type) with terms from five to 20 years.

Additionally, if you already have an account with Citizens, you could get a 0.25% rate discount — plus another 0.25% off your rate if you sign up for autopay.


4.7
Credible rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


Rates and terms


Fees and Discounts


Customer Experience


Citizens Student Loan Refinancing


Fixed APR


Lowest fixed rate available from this lender
2.44%+1


Variable APR


Lowest variable rate available from this lender
2.24%+1


Min. credit score


Minimum credit score needed to qualifyDoes not disclose


Loan amount


Range needed to refinance with this lender$10,000 to $750,000

Does refinancing make sense for you?

Compare offers from top refinancing lenders to determine your actual savings.

Check Personalized Rates>Checking rates won’t affect your credit scoreView DetailsFixed APR:
2.44%+1Variable APR:
2.24%+1Min. credit score: Does not discloseLoan amount: $10,000 to $750,000Loan terms (years): 5, 7, 10, 15, 20Repayment options: Immediate repayment, academic deferment, military deferment, forbearance, loans discharged upon death or disabilityFees: Late feeDiscounts: Autopay, loyaltyEligibility: Must be a U.S. citizen or permanent resident and have at least $10,000 in student loansCustomer service: Email, phone, chatSoft credit check: YesCosigner release: After 24 to 36 monthsLoan servicer: Firstmark ServicesMax. Undergraduate Loan Balance: $100,000 to $149,000Max. Graduate Loan Balance: Less than $150,000Offers Parent PLUS Refinancing: Yes

Pros

0.25% autopay discount0.25% loyalty discountDegree not required

Cons

Doesn’t disclose minimum credit score or income requirementsLong cosigner release period (36 months)Cosigner release not available on the Education Refinance Loan for Parents

Check Out: Can You Refinance a Student Loan to a 30-Year Term?

College Ave

Best for: Variety of repayment terms

College Ave offers refinancing on loan amounts from $5,000 to $300,000 (depending on degree type). Additionally, borrowers can choose between 16 repayment terms ranging from five to 20 years, making it easier to fit your payments into your budget.


4.4
Credible rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


Rates and terms


Fees and Discounts


Customer Experience


College Ave Student Loan Refinancing


Fixed APR


Lowest fixed rate available from this lender
2.99%+2


Variable APR


Lowest variable rate available from this lender
2.94%+2


Min. credit score


Minimum credit score needed to qualify Does not disclose


Loan amount


Range needed to refinance with this lender$5,000 to $300,000

Does refinancing make sense for you?

Compare offers from top refinancing lenders to determine your actual savings.

Check Personalized Rates>Checking rates won’t affect your credit scoreView DetailsFixed APR:
2.99%+2Variable APR:
2.94%+2Min. credit score: Does not discloseLoan amount: $5,000 to $300,000Loan terms (years): 5, 7, 10, 12, 15, 20Repayment options: Military deferment, forbearance, loans discharged upon death or disabilityFees: Late feeDiscounts: AutopayEligibility: All states except for MECustomer service: Email, phone, chatSoft credit check: YesCosigner release: After 24 to 36 monthsLoan servicer: College Ave Servicing LLCMax. Undergraduate Loan Balance: $100,000 to $149,000Max. Graduate Loan Balance: Less than $300,000Offers Parent PLUS Refinancing: Yes

Pros

0.25% autopay discountVariety of repayment terms availableCosigner release offered after 24 months of consecutive, on-time payments

Cons

Doesn’t disclose minimum credit score or income requirementsUndergraduate or graduate degree requiredParents can’t transfer Parent PLUS Loans to student

CommonBond

Best for: Borrowers who plan to pay off their loan quickly

With CommonBond, you can refinance loan amounts from $5,000 to $500,000 with repayment terms from five to 20 years.

CommonBond also offers a unique hybrid loan option that starts with a fixed rate for the first half of the repayment term before switching to a variable rate — this could help you save money if you plan to pay off your loan quickly.


4.5
Credible rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


Rates and terms


Fees and Discounts


Customer Experience


CommonBond Student Loan Refinancing


Fixed rate


Lowest fixed rate available from this lender
2.44%+1


Min. credit score


Minimum credit score needed to qualify680


Loan amount


Range needed to refinance with this lender$5,000 to $500,000

Does refinancing make sense for you?

Compare offers from top refinancing lenders to determine your actual savings.

Check Personalized Rates>Checking rates won’t affect your credit scoreView DetailsFixed rate:
2.44%+1Variable rate:
2.24%+1Min. credit score: 680Loan amount: $5,000 to $500,000Cosigner release: YesLoan terms (years): 5, 7, 10, 15, 20Repayment options: Academic deferment, forbearance, loans discharged upon death or disabilityFees: Late feeDiscounts: AutopayEligibility: Available in all states, except MS and NVCustomer service: Email, phone, chatSoft credit check: YesLoan servicer: FirstMarkMax. undergraduate loan balance: $500,000Max. graduate loan balance: $500,000Offers Parent PLUS refinancing: YesMin. income: $65,000 (for 15- and 20-year products)

Pros

Offers a hybrid loan option that starts with a fixed rate for the first half of the repayment term before switching to a variable rate0.25% autopay discountUp to 24 months of forbearance available over the life of the loan

Cons

Must be have graduated from an eligible Title IV accredited university or graduate program within CommonBond’s network$65,000 minimum income requirement for 15- and 20-year productsNot available in Mississippi or Nevada

Learn More: Debt-to-Income Ratio for Refinancing Student Loans

EDvestinU

Best for: Borrowers who didn’t graduate

EDvestinU offers refinancing on loan amounts from $7,500 to $200,000 with terms from five to 20 years. Unlike many lenders, EDvestinU doesn’t require borrowers to have graduated to be eligible.

edvestinu student loan refinance
3.8
Credible rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


Rates and terms


Fees and Discounts


Customer Experience


EDvestinU Student Loan Refinancing


Fixed APR


Lowest fixed rate available from this lender
1.8%+5


Variable APR


Lowest variable rate available from this lender
1.8%+5


Min. credit score


Minimum credit score needed to qualify700


Loan amount


Range needed to refinance with this lender$7,500 to $200,000

Does refinancing make sense for you?

Compare offers from top refinancing lenders to determine your actual savings.

Check Personalized Rates>Does refinancing make sense for you? Compare offers from top refinancing lenders to determine your actual savings.View DetailsFixed APR:
1.8%+5Variable APR:
1.8%+5Min. credit score: 700Loan amount: $7,500 to $200,000Loan terms (years): 5, 10, 15, 20Repayment options: Immediate repayment, academic deferment, forbearance, loans discharged upon death or disabilityFees: NoneDiscounts: AutopayEligibility: Must be a U.S. citizen or permanent resident and submit two personal referencesCustomer service: Email, phoneSoft credit check: YesCosigner release: After 36 monthsLoan servicer: Granite State Management & Resources (GSM&R)Max. Undergraduate Loan Balance: $150,000 to $249,000Max. Graduate Loan Balance: $150,000 to $199,000Offers Parent PLUS Refinancing : Yes

Pros

0.25% autopay discountDegree not requiredNo application, origination, or disbursement fees

Cons

Could be hard to qualify if you don’t have good creditLong cosigner release period (36 months)$30,000 to $50,000 minimum income requirement (depending on loan amount)

ELFI

Best for: Borrowers with high loan balances

Education Loan Finance (ELFI) doesn’t have a maximum loan amount — you just need at least $15,000 in student loans to refinance. You can choose between repayment terms from five to 20 years — though keep in mind that 15- and 20-year terms aren’t available for parent borrowers.


4.4
Credible rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


Rates and terms


Fees and Discounts


Customer Experience


Education Loan Finance Student Loan Refinancing


Fixed APR


Lowest fixed rate available from this lender
2.47%+3


Variable APR


Lowest variable rate available from this lender
2.39%+3


Min. credit score


Minimum credit score needed to qualify680


Loan amount


Range needed to refinance with this lenderNo maximum

Does refinancing make sense for you?

Compare offers from top refinancing lenders to determine your actual savings.

Check Personalized Rates>Checking rates won’t affect your credit scoreView DetailsFixed APR:
2.47%+3Variable APR:
2.39%+3Min. credit score: 680Loan amount: No maximumLoan terms (years): 5, 7, 10, 12, 15, 20Repayment options: ForbearanceFees: NoneDiscounts: NoneEligibility: Must be a U.S. citizen or permanent resident, have at least $15,000 in student loan debt, and have a bachelor’s degree or higher from an approved schoolCustomer service: Email, phoneSoft credit check: YesCosigner release: NoLoan servicer: MohelaMax. Undergraduate Loan Balance: No maximumMax. Graduate Loan Balance: No maximumOffers Parent PLUS Refinancing: Yes

Pros

No maximum loan amountVariable rates capped at 9.95% APRUp to 12 months of forbearance available to borrowers facing financial hardship

Cons

Must have at least $15,000 to refinanceCosigner release not offered$35,000 minimum income requirement

Check Out: How to Pay Off $30,000 in Student Loans

INvestEd

Best for: Borrowers who might need access to forbearance

With INvestEd, you can refinance $5,000 to $250,000 with terms from five to 20 years. Additionally, borrowers can access up to 24 months of forbearance over the life of the loan, which could be helpful if you experience financial hardship or unexpected circumstances.


3.9
Credible rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


Rates and terms


Fees and Discounts


Customer Experience


INvestEd Student Loan Refinancing


Fixed APR


Lowest fixed rate available from this lender
3.47%+4


Variable APR


Lowest variable rate available from this lender
2.44%+4


Min. credit score


Minimum credit score needed to qualify670


Loan amount


Range needed to refinance with this lender$5,000 to $250,000

Does refinancing make sense for you?

Compare offers from top refinancing lenders to determine your actual savings.

Check Personalized Rates>Checking rates won’t affect your credit scoreView DetailsFixed APR:
3.47%+4Variable APR:
2.44%+4Min. credit score: 670Loan amount: $5,000 to $250,000Loan terms (years): 5, 10, 15, 20Repayment options: Academic deferment, military deferment, forbearanceFees: Late feeDiscounts: AutopayEligibility: Must be U.S. citizen or permanent residentCustomer service: Email, phone, chatSoft credit check: YesCosigner release: YesMax undergraduate loan balance: $250,000Max graduate loan balance: $250,000Offers Parent PLUS refinancing: Yes

Pros

0.25% autopay discountUp to 24 months of forbearance available over the life of the loanDegree not required

Cons

Charges late and returned payment feesLong cosigner release period (48 months)$36,000 minimum income requirement

ISL Education Lending

Best for: Borrowers who want to refinance while they’re in school

ISL Education Lending offers refinancing on loan amounts from $5,000 to $300,000 ($10,000 minimum for California residents) with terms from five to 20 years. Unlike many other lenders, ISL Education Lending doesn’t require you to have graduated — in fact, you can refinance while you’re still in school.

Keep in mind that if you’re still in school, you can refinance a maximum of $200,000.


4.2
Credible rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


Rates and terms


Fees and Discounts


Customer Experience


ISL Education Lending Student Loan Refinancing


Fixed APR


Lowest fixed rate available from this lender
2.24%+7


Min. credit score


Minimum credit score needed to qualify670


Loan amount


Range needed to refinance with this lenderUp to $300,000

Does refinancing make sense for you?

Compare offers from top refinancing lenders to determine your actual savings.

Check Personalized Rates>Checking rates won’t affect your credit scoreView DetailsFixed APR:
2.24%+7Variable APR: N/AMin. credit score: 670Loan amount: Up to $300,000Loan terms (years): 5, 7, 10, 15, 20Time to fund: Usually one business dayRepayment options: Academic deferral, military deferral, forbearance, death/disability dischargeFees: NoneDiscounts: AutopayEligibility: Available in all 50 statesCustomer service: Email, phoneSoft credit check: YesCosigner release: After 24 monthsMax. undergraduate loan balance: $300,000Max. graduate balance: $300,000Offers Parent PLUS loans: YesMin. income: None

Pros

Degree not requiredGraduated repayment plan offeredNo minimum income requirement

Cons

Variable interest rates not offeredCould be hard to qualify if you have poor creditLower maximum loan amount if you want to refinance while still in school

Learn More: When to Refinance Student Loans

MEFA

Best for: Borrowers who attended a public or nonprofit university

With the Massachusetts Educational Financing Authority (MEFA), you can refinance $10,000 up to the total amount of your qualified education debt. Repayment terms range from seven to 15 years.

Keep in mind that you must have attended a public or nonprofit university to refinance with MEFA — for-profit schools aren’t eligible.


4.0
Credible rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


Rates and terms


Fees and Discounts


Customer Experience


MEFA Student Loan Refinancing


Fixed APR


Lowest fixed rate available from this lender
3.05%+


Variable APR


Lowest variable rate available from this lender
3.05%+


Min. credit score


Minimum credit score needed to qualify670


Loan amount


Range needed to refinance with this lender$10,000 up to the total amount

Does refinancing make sense for you?

Compare offers from top refinancing lenders to determine your actual savings.

Check Personalized Rates>Checking rates won’t affect your credit scoreView DetailsFixed APR:
3.05%+Variable APR:
3.05%+Min. credit score: 670Loan amount: $10,000 up to the total amountLoan terms (years): 7, 10, 15Repayment options: Military deferment, loans discharged upon death or disabilityFees: NoneDiscounts: NoneEligibility: Must be a U.S. citizen or permanent resident and have at least $10,000 in student loansCustomer service: Email, phoneSoft credit check: YesCosigner release: NoLoan servicer: AESMax. Undergraduate Loan Balance: No maximumMax. Gradaute Loan Balance: No maximumOffers Parent PLUS Refinancing: Yes

Pros

Might be able to refinance up to the total amount of your qualified education debtDegree not requiredNo fees

Cons

Not available for borrowers who attended for-profit universitiesNo discounts offeredLimited repayment terms (7, 10, or 15 years)

PenFed

Best for: Spouses who want to refinance their loans together

With PenFed, you can refinance $7,500 to $300,000 with terms from five to 15 years. PenFed is also the only major lender that allows spouses to refinance their loans together.


4.5
Credible rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


Rates and terms


Fees and Discounts


Customer Experience


PenFed Student Loan Refinancing


Fixed APR


Lowest fixed rate available from this lender
2.89%+


Variable APR


Lowest variable rate available from this lenderN/A


Min. credit score


Minimum credit score needed to qualify670


Loan amount


Range needed to refinance with this lender$7,500 to $300,000

Does refinancing make sense for you?

Compare offers from top refinancing lenders to determine your actual savings.

Check Personalized Rates>Checking rates won’t affect your credit scoreView DetailsFixed APR:
2.89%+Variable APR: N/AMin. credit score: 670Loan amount: $7,500 to $300,000Loan terms (years): 5, 8, 12, 15Repayment options: Does not discloseFees: NoneDiscounts: NoneEligibility: Must be a U.S. citizen and have and at least $7,500 in student loansCustomer service: Email, phone, chatSoft credit check: YesCosigner release: After 12 monthsLoan servicer: PenFedMax. Undergraduate Loan Balance: $300,000Max. Graduate Loan Balance: $300,000Offers Parent PLUS Refinancing: Yes

Pros

Spouses can refinance their student loans togetherCosigner release offered after 12 months of consecutive, on-time paymentsNo fees

Cons

No discounts offered$42,000 to $50,000 minimum income requirement (depending on loan amount)Must have bachelor’s degree or higher

Learn More: 4 Credit Unions for Student Loan Refinancing

RISLA

Best for: Borrowers looking for income-based repayment options

Most private student loans don’t offer the repayment options that federal student loans do. However, the Rhode Island Student Loan Authority (RISLA) offers an income-based repayment (IBR) plan to borrowers facing financial hardship. Like the federal IBR plan, your payments will be 15% of your discretionary income, and RISLA will forgive any remaining balance after 25 years.

With RISLA, you can refinance loan amounts from $7,500 to $250,000 (depending on the highest degree you’ve earned) with terms from five to 15 years.


3.7
Credible rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


Rates and terms


Fees and Discounts


Customer Experience


RISLA Student Loan Refinancing


Fixed APR


Lowest fixed rate available from this lender
3.29%+


Variable APR


Lowest variable rate available from this lenderN/A


Min. credit score


Minimum credit score needed to qualify680


Loan amount


Range needed to refinance with this lender$7,500 to $250,000

Does refinancing make sense for you?

Compare offers from top refinancing lenders to determine your actual savings.

Check Personalized Rates>Checking rates won’t affect your credit scoreView DetailsFixed APR:
3.29%+Variable APR: N/AMin. credit score: 680Loan amount: $7,500 to $250,000Loan terms (years): 5, 10, 15Repayment options: Academic deferment, military deferment, forbearance, loans discharged upon death or disabilityFees: NoneDiscounts: AutopayEligibility: Available in all 50 states; must also have at least $7,500 in student loans and a minimum income of $40,000Customer service: Email, phoneSoft credit check: Does not discloseCosigner release: NoLoan servicer: Rhode Island Student Loan AuthorityMax. Undergraduate Loan Balance: $150,000 – $249,000Max. Graduate Loan Balance: $200,000 – $249,000Offers Parent PLUS Refinancing: Yes

Pros

Offers an income-based repayment plan to borrowers facing financial hardshipCan defer payments for up to 36 months if you return to graduate schoolDegree not required

Cons

Variable rates not offered$40,000 minimum income requirementCosigner release not offered

SoFi

Best for: Borrower perks

With SoFi, you can refinance loan amounts starting at $5,000 up to the full balance of your qualified education loans with terms from five to 20 years.

Additionally, SoFi borrowers have access to several perks, such as unemployment protection, career coaching, and investing advice.


4.5
Credible rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


Rates and terms


Fees and Discounts


Customer Experience


SoFi Student Loan Refinancing


Fixed APR


Lowest fixed rate available from this lender
2.49%+6


Variable APR


Lowest variable rate available from this lender
2.25%+6


Min. credit score


Minimum credit score needed to qualifyDoes not disclose


Loan amount


Range needed to refinance with this lender$5,000 up to the full balance

Does refinancing make sense for you?

Compare offers from top refinancing lenders to determine your actual savings.

Check Personalized Rates>Checking rates won’t affect your credit scoreView DetailsFixed APR:
2.49%+6Variable APR:
2.25%+6Min. credit score: Does not discloseLoan amount: $5,000 up to the full balanceLoan terms (years): 5, 7, 10, 15, 20Repayment options: Academic deferment, military defermentFees: NoneDiscounts: Autopay, loyaltyEligibility: Available in all 50 statesCustomer service: Email, phone, chatSoft credit check: YesCosigner release: NoMax undergraduate loan balance: No maximumMax graduate loan balance: No maximumOffers Parent PLUS refinancing: Yes

Pros

0.25% autopay discountMight be able to refinance the full balance of your qualified education loansBorrower perks, such as unemployment protection and investing advice

Cons

Doesn’t disclose minimum credit requirementsDoesn’t offer cosigner releaseMust have earned an associate degree or higher from a Title IV school

Check Out: How to Get Student Loan Repayment Help

Methodology

To find the “best companies,” Credible looked at loan and lender data points from 12 categories to give you a well-rounded perspective on each of our partner refinancing lenders.

Here’s what we considered:

Interest ratesRepayment termsRepayment optionsFeesDiscountsCustomer service availabilityMaximum loan balancesWillingness to refinance parent loansEligibility criteriaCosigner release optionsWhether the minimum credit score is available publiclyWhether consumers could request rates with a soft credit check

Our hope is that this will be a win-win situation for you and us — we only want to get paid if you find a loan that works for you, not by selling your data. This means Credible will only get paid by the lender if you finish the refinancing process and a loan is disbursed. Additionally, Credible charges you no fees of any kind to compare your refinancing options.

Other student loan refinancing lenders to consider

Here are more student loan refinancing companies we evaluated. Keep in mind that these lenders are not offered through Credible, so you won’t be able to easily compare your rates with them on the Credible platform like you can our partner lenders.

LenderLoan terms (years)Max loan balance

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>10, 20Undergrad: $249,000
Grad: $199,000Min. credit score:
Does not discloseLoan amount:
Up to $250,000Loan terms (years):
10, 20Repayment options:
Academic deferment, military deferment, forbearance, loans discharged upon death or disabilityFees:
NoneDiscounts:
AutopayEligibility:
Available in all 50 statesCustomer service:
Email, phoneSoft credit check:
Does not discloseCosigner release:
NoMax. undergraduate Loan Balance:
$150,000 to $249,000Max. graduate Loan Balance:
$150,000 to $199,000Offers Parent PLUS Refinancing:
No

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>5, 7, 10, 15Undergrad: $500,000
Grad: $500,000Rates:
fixed, variableMin. credit score:
Does not disclose Loan amount:
$60,000 to $350,000Cosigner release:
NoLoan terms (years):
5, 7, 10, 15, 20Fees:
NoneDiscounts:
Autopay, loyaltyEligibility:
Available in CA, CT, FL, MA, NY, OR, WYCustomer service:
Email, phoneSoft credit check:
YesMax. undergraduate loan balance:
$500,000Max. graduate loan balance:
$500,000

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>10, 15, 20Undergrad: $249,000
Grad: $249,000Rates:
Fixed, variableMin. credit score:
Does not discloseLoan amount:
$10,000 to $250,000Cosigner release:
After 24 to 36 monthsLoan terms (years):
10, 15, 20Repayment options:
Military deferment, forbearanceFees:
Late feeDiscounts:
AutopayEligibility:
Available in all 50 statesCustomer service:
Email, phone, chatSoft credit check:
YesLoan servicer:
Student Loan Finance CorporationMax. undergraduate Loan Balance:
$150,000 to $249,000Max. graduate Loan Balance:
$200,000 to $249,000Offers Parent PLUS Refinancing:
Yes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>5, 7, 10, 15Undergrad: None
Grad: NoneMin. credit score:
Does not discloseLoan amount:
$5,000 to $300,000Cosigner release:
Does not discloseLoan terms (years):
5, 7, 10, 15Repayment options:
Immediate repayment, forbearance, loans discharged upon death or disabilityFees:
Late feeDiscounts:
AutopayEligibility:
Available in all 50 statesCustomer service:
Email, phoneSoft credit check:
YesMax. undergraduate Loan Balance:
No maximumMax. graduate Loan Balance:
No maximumOffers Parent PLUS Refinancing:
Yes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>5, 7, 10, 15, 20Does not discloseRates:
Fixed, variableMin. credit score:
Does not discloseLoan amount:
$5,000 to $300,000Cosigner release:
YesLoan terms (years):
5, 7, 10, 15, 20Repayment options:
Does not discloseFees:
NoneDiscounts:
AutopayEligibility:
Does not discloseCustomer service:
Email, phoneSoft credit check:
YesLoan servicer:
LendKey Technologies Inc.Max. undergraduate Loan Balance:
Does not discloseMax. graduate Loan Balance:
Does not discloseOffers Parent PLUS Refinancing:
No

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>5, 10, 15Undergrad: $99,000
Grad: $150,000Min. credit score:
Does not discloseLoan amount:
Less than $150,000Loan terms (years):
5, 10, 15Repayment options:
Academic deferment, military deferment, forbearance, loans discharged upon death or disabilityFees:
Does not discloseDiscounts:
AutopayEligibility:
Available in all 50 statesCustomer service:
Email, phoneSoft credit check:
Does not discloseCosigner release:
YesMax. Undergraduate Loan Balance:
Less than $99,000Max. graduate Loan Balance:
Less than $150,000Offers Parent PLUS Refinancing:
Yes

Credible Rating>


Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.


View details>Does not discloseUndergrad: None
Grad: NoneMin. credit score:
Does not discloseLoan amount:
No maximumLoan terms:
Does not discloseRepayment options:
Academic deferment, forbearanceFees:
Late feeDiscounts:
AutopayEligibility:
Available in all 50 statesCustomer service:
Email, phone, chatSoft credit check:
YesCosigner release:
YesMax. undergraduate Loan Balance:
No maximumMax. graduate Loan Balance:
No maximumOffers Parent PLUS Refinancing:
YesThe lenders in this table aren’t our partners. But you can use Credible to compare rates in 2 minutes from other lenders who offer student loan refinancing.

Compare Now

How to refinance student loans without a cosigner

If you’re ready to refinance your student loans without a cosigner, follow these four steps:

Check your credit. When you apply for refinancing, the lender will evaluate your credit to determine your creditworthiness — so it’s a good idea to check your credit beforehand to see where you stand. You can use a site like AnnualCreditReport.com to review your credit reports for free. If you find any errors, dispute them with the appropriate credit bureaus to potentially boost your credit score.Compare lenders and pick a loan option. Be sure to shop around and compare as many student loan refinance companies as you can to find the right loan for you. Consider not only interest rates but also repayment terms, any fees charged by the lender, and eligibility requirements. After you’ve done your research, pick the loan option that works best for your needs.Complete the application. Once you’ve chosen a lender, you’ll need to fill out a full application and submit any required documentation, such as tax returns or pay stubs. Also be prepared to provide information regarding the loans you want to refinance.Manage your payments. If you’re approved, continue making payments on your old loans while the refinance is processed. Afterward, you could consider signing up for autopay so you won’t miss any payments in the future — many lenders offer a rate discount to borrowers who opt for automatic payments.Keep in mind: While you can refinance both federal and private loans, refinancing federal student loans will cost you access to federal benefits and protections — such as income-driven repayment plans and student loan forgiveness programs.

Depending on your credit, you might qualify for a lower interest rate through refinancing. This means you could save money on interest and potentially pay off your loan faster. You can use our calculator below to see how much you can save by refinancing your student loans.

Step 1. Enter your loan balance

Loan balanceEnter the remaining amount of the loans you’d like to refinance

Step 2. Enter current loan information

Interest rateEnter the average annual interest rate of the loans you’d like to refinanceMonthly paymentEnter the monthly amount you currently pay on your loans (or enter remaining term)Remaining termEnter the amount of time left to repay your loan (or enter monthly payment)years

Step 3. Enter your new loan information to start calculating your savings

Interest rateEnter an estimated new interest rate.Monthly paymentEnter the monthly amount to pay on your new loan (or enter new loan term)New loan termEnter the amount of time you have to repay your loan (or enter monthly payment)yearsLifetime SavingsIncreased Lifetime Cost
New Monthly Payment>Monthly SavingsIncreased Monthly Cost
If you refinance your student loan at>
interest rate, you>can savewill pay an additional
monthly and pay off your loan by>.
The total cost of the new loan will be>.

Does refinancing make sense for you?

Compare offers from top refinancing lenders to determine your actual savings.

Check Personalized Rates

Checking rates won’t affect your credit score.

Check Out: Student Loan Repayment Calculator: Estimate Your Payoff Date

Pros of not using a cosigner when refinancing

Refinancing without a cosigner could be the right option for some borrowers, but it isn’t right for everyone. Here are a few potential benefits to keep in mind:

No need to find one: In some cases, borrowers might not know anyone with good enough credit to act as a cosigner. If you refinance without a cosigner, you won’t need to worry about this.No risk to your relationships: A cosigner shares responsibility for the loan — which means they’re on the hook if you can’t make your payments. If this happens, it could severely strain your relationship with your cosigner. By refinancing without a cosigner, you won’t risk potentially alienating any friends or family members.Only you are responsible for the loan: Without a cosigner, you’re the only one responsible for your refinanced loan. This means you can focus on repaying your loan without worrying about negatively affecting a cosigner along the way — which might feel financially empowering for some.

Learn More: When Student Loan Refi Is a Good Idea and When to Reconsider

Cons of not using a cosigner when refinancing

Could be hard to qualify on your own: If you have less-than-perfect credit, you might have a hard time getting approved for refinancing without a cosigner.Might not get the best rates: Even if you don’t need a cosigner to get approved, having one could get you a lower rate than you’d get on your own. Unless you have excellent credit, you might not qualify for the lowest rates advertised by lenders without a cosigner.Less motivation to stay on top of your payments: Some borrowers might need the extra motivation of having a cosigner to make on-time payments.

Check Out: Should I Pay Off My Student Loans or Invest in Stocks?

How cosigner release works

Some lenders offer a cosigner release option — so if you already have a cosigner, you might be able to remove them from the loan after meeting the requirements. Generally, you’ll have to make consecutive, on-time payments for a certain period of time and also meet the underwriting criteria on your own to qualify for cosigner release.

Here are Credible’s partner lenders that offer cosigner release:

Advantage After 36 monthsCitizensAfter 36 monthsCollege AveAfter 24 monthsCommonBond After 36 monthsEDvestinUAfter 36 monthsINvestEd After 48 months of on-time paymentsISL Education LendingAfter 24 monthsPenFed After 12 months

Learn More: How to Pay off Student Loans in 10 Years or Less

Frequently asked questions about refinancing without a cosigner

Here are the answers to a few commonly asked questions about refinancing without a cosigner:

Can you consolidate student loans without a cosigner?

Yes, you can consolidate student loans without a cosigner. Keep in mind that the terms consolidation and refinancing are often used interchangeably, but they mean something different for federal and private student loans.

Federal student loan consolidation: You can consolidate federal student loans into a Direct Consolidation Loan. While this won’t change your interest rate, you can extend your repayment term up to 30 years to reduce your monthly payments — though remember that you’ll pay more interest over time. Unlike with refinancing, you don’t need good credit to federally consolidate your loans, and you don’t need to worry about having a cosigner. You also won’t lose access to your federal benefits.Private student loan refinancing: Also known as private student loan consolidation, this process lets you combine multiple student loans — leaving you with one loan and payment to manage. Depending on your credit, you might qualify for a better interest rate, which can save you money on your overall loan cost. Or you could opt to extend your repayment term to lower your monthly student loan payments. Keep in mind that if you refinance federal loans, you’ll no longer have access to federal protections.

Check Out: How to Consolidate Your Student Loans

What do I do if I can’t get approved for a student loan?

If you can’t get approved for a student loan without a cosigner, you have a couple of options:

Improve your credit. If you can wait to refinance, spend some time building your credit first. There are several ways to potentially do this, such as making on-time payments on all of your bills, paying down credit card balances, or becoming an authorized user on the credit card account of someone you trust.Apply with a cosigner. If there’s no way for you to get approved on your own, you might need to refinance with a cosigner. Keep in mind that a cosigner can be anyone with good credit — such as a parent, other relative, or trusted friend — who is willing to share responsibility for the loan. Also remember that you might be able to remove your cosigner from the loan later on if you qualify for cosigner release.

Learn More: Fixed or Variable Student Loan: Which is Right for You?

Can a cosigner be removed from a student loan?

Yes, there are two ways a cosigner can be removed from a loan:

Cosigner release: Several lenders provide a cosigner release option. This means you could have your cosigner removed from the loan after meeting certain conditions — in general, you’ll need to make consecutive, on-time payments for a specific period of time and meet the underwriting criteria on your own.Refinancing again: You can also remove a cosigner by refinancing your student loan again.

Check Out: How Long It Takes to Pay Off Student Loans

How much does it cost to refinance student loans?

There’s no upfront cost to refinance your student loans. However, keep in mind that you’ll need to pay any interest that accrues on the loan as well as any fees charged by the lender, such as late fees.

Tip: If you want to keep your repayment costs low, it’s a good idea to choose the shortest repayment term you can afford. This way, you’ll pay less in interest over time.

If you decide to refinance your student loans, remember to consider as many lenders as possible to find the right loan for you. Credible makes this easy: You can compare your prequalified rates from multiple lenders in two minutes — without affecting your credit.

Find out if refinancing is right for you

Compare actual rates, not ballpark estimates – Unlock rates from multiple lenders in about 2 minutesWon’t impact credit score – Checking rates on Credible won’t impact your credit scoreData privacy – We don’t sell your information, so you won’t get calls or emails from multiple lendersSee Your Refinancing Options
Credible is 100% free!

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The post 13 Best Loans for Refinancing Student Loans Without a Cosigner appeared first on Credible.

Loans Serivces

What Happens If You Miss a Mortgage Payment?

Kevin Smith

While nobody wants to miss a mortgage payment, it can happen — especially if money is tight one month.

Generally, missed payments can cause your credit score to plunge and lead to late fees. Multiple missed payments can even lead to foreclosure, further damaging your credit and leaving you with no home. But it doesn’t all occur at once.

Here’s what happens if you miss a mortgage payment:

The typical timeline of missed mortgage paymentsCOVID-19 and mortgage foreclosuresHow does a late mortgage payment affect my credit score?How much will a mortgage late fee be?How can I skip a mortgage payment without penalty?

The typical timeline of missed mortgage payments

A mortgage payment that’s overdue by just a few days might not have any impact on your credit. That’s because most loan servicers offer a grace period where you can make a payment within 15 days after the due date without penalties. After the grace period, it may charge you a late fee, which should be explained in your loan documents.

But failing to make a payment altogether can negatively affect your credit and the home loan.

One missed mortgage payment

Your servicer will likely report the missed payment to the credit bureaus once it’s 30 days late. This can hurt your credit score. Generally, a late payment can cause more damage for people with higher credit scores.

If you haven’t made a payment for 36 days, your loan servicer is required to contact you — though it may reach out sooner.

Good to know: The servicer can’t start foreclosure proceedings right away, but the late payment is a serious matter nonetheless.

Two missed mortgage payments

Once you’re 45 days past due, your loan servicer may assign someone to your account. They’ll contact you and let you know about your options.

After 60 days — or two missed mortgage payments — you’ll incur a second late fee. The late payment will also be reported to the credit bureaus.

Don’t Miss: What to Do If You Fall Behind on Mortgage Payments

Three missed mortgage payments

After three missed payments, your loan servicer will likely send another letter known as a demand letter or notice to accelerate. The letter acts as a notice to bring your mortgage current or face foreclosure proceedings.

Additionally, your loan servicer will report the late payment to the credit bureaus, which may cause your credit score to drop even more.

Four missed payments

Once you’re 120 days past due, if you haven’t arranged to make repayments with your bank, your loan servicer can start the legal foreclosure process. It can also add attorney fees to your balance.

The loan servicer’s attorney will schedule a home sale and notify you of the foreclosure date. This date varies with each state, but it may be as soon as two or three months after receiving your demand letter.

Good to know: If you make arrangements with your lender or pay the total amount due before the date of sale, you may be able to keep your home.

The loan servicer will also report the newest late payment to the credit bureaus, and your credit score may drop once again. Each late payment can stay on your credit history for up to seven years.

To find a great mortgage rate, be sure to shop around. Credible lets you do this easily — compare home loans from all of our partner lenders in one place. It’s free, and checking rates with us will never affect your credit score.

Credible makes getting a mortgage easy

Instant streamlined pre-approval: It only takes 3 minutes to see if you qualify for an instant streamlined pre-approval letter, without affecting your credit.We keep your data private: Compare rates from multiple lenders without your data being sold or getting spammed.A modern approach to mortgages: Complete your mortgage online with bank integrations and automatic updates. Talk to a loan officer only if you want to.Find Rates Now

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COVID-19 and mortgage foreclosures

Since early 2020, more than 7 million homeowners have taken advantage of mortgage forbearance programs to keep their accounts in good standing. Additionally, the U.S. government put a moratorium on foreclosures through the first half of 2021.

Although both measures helped foreclosure activity reach historic lows in 2020, homeowners may need to find another form of assistance. The foreclosure ban expired July 31, 2021, and about 1.75 million homeowners were still in some sort of forbearance program.

You might be able to extend your forbearance protection or get your account current by calling your mortgage lender and setting up a plan.

This can keep your account and credit in good standing. But if you can’t restart payments, your loan servicer will need to take extra steps — such as evaluating you for assistance programs — before starting the foreclosure process.

Mortgage forbearance

With mortgage forbearance, your loan servicer agrees to temporarily pause your monthly mortgage payments for a certain period of time. It also won’t start the foreclosure process.

During the coronavirus pandemic, lenders can report that your mortgage account is in forbearance. But, per the CARES Act, your account must be marked as “current” if it was in good standing before entering forbearance.

If your loan is federally backed, you can call your loan servicer and request pandemic-related mortgage forbearance until Sept. 30, 2021. Extensions may apply, too:

Fannie Mae and Freddie Mac loans: Conventional loan borrowers may request an extension for a maximum of 18 months of forbearance. You may be eligible for the extension if you entered forbearance before Feb. 28, 2021.Government-backed loans: Borrowers with a loan backed by the FHA, VA, or USDA may request an extension as long as they enrolled in forbearance on or before June 30, 2020.

Loan repayment options

If you’re 120 days or more past due on your mortgage payments or you’re about to exit a mortgage forbearance program, your loan servicer must reach out to discuss options.

Here’s how you may be able to rehabilitate your account and avoid foreclosure:

Defer payments: You can resume regular mortgage payments and move any missed or suspended payments to the end of the loan term. This option is usually available for Fannie- and Freddie-backed loans, VA loans, FHA loans, and USDA loans.Modify the loan terms: The servicer may agree to a loan modification, where you change the loan’s length or interest rate to make the payments more affordable. On federally backed loans, your servicer may be able to lower your mortgage payment by 25% or more.Enter a repayment plan: You can also create a repayment plan with your loan servicer if you have a conventional mortgage, FHA loan, USDA loan, or VA loan. You’ll spread your unpaid balance over a certain period of time — such as 12 months — on top of your regular mortgage payments. This will temporarily result in higher monthly payments.Reinstate the loan: This option lets you pay back the outstanding balance all at once. Under all federally backed mortgage programs, loan servicers can’t require you to pay off your forbearance balance with a lump sum. But you can choose to do this if you have the funds.

Foreclosure safeguards

The loan payment options mentioned above may work for borrowers who are financially sound. But the loan servicer may be able to start the foreclosure process if a borrower still can’t make payments after forbearance ends or after missing four payments.

However, homeowners are protected by three new safeguards established by the Consumer Financial Protection Bureau. Before starting foreclosure, the loan servicer must:

Ask the borrower to complete a loss mitigation application. The loan servicer must give you the opportunity to pursue loss mitigation, which may prevent foreclosure. Loss mitigation options include some of the repayment options we’ve already discussed (such as loan modification and repayment plans) as well as a short sale.Confirm the property is abandoned. If loss mitigation doesn’t work, the loan servicer may start foreclosure proceedings after confirming a property is abandoned under local and state laws.Reach out to the borrower. The loan servicer will also need to make a reasonable effort to reach the borrower.

These new safeguards apply on top of existing rules that bar loan servicers from starting the foreclosure process until a homeowner is at least 120 days past due on a home loan. They’ll be in effect from Aug. 31, 2021, to Dec. 31, 2021.

How does a late mortgage payment affect my credit score?

When you’re at least 30 days behind on mortgage payments, your loan servicer reports the information to the credit bureaus. The late payment can remain on your credit reports for up to seven years, and it may affect your credit score during this time.

Missing several payments in a row can damage your credit score more than missing only one payment. And multiple missed payments could result in foreclosure, which is one of the most damaging negative marks you can have on your credit.

How much will a mortgage late fee be?

Homeowners usually have a grace period of 15 days after the due date to make their mortgage payment. After that point, you may pay a late fee for each month that you miss a payment.

The late fee is set by state law, but it usually equals 3% to 6% of your monthly payment. So, if your mortgage payment is usually $1,000 and your late fee is 5%, then you may be on the hook for an extra $50 for each month you go without paying.

How can I skip a mortgage payment without penalty?

If you stop making mortgage payments but you’re in a foreclosure-prevention program — such as forbearance, loan modification, or a short sale — then you might be able to avoid foreclosure and the credit hit. Perform some research and request one of these options when you’re having financial problems.

The post What Happens If You Miss a Mortgage Payment? appeared first on Credible.

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Real Estate

Refinance Programs for Seniors

Kevin Smith

If you’re a senior, you may have thought about taking advantage of record-low interest rates and refinancing your mortgage to save money or access your equity. However, you might also be wondering whether you can qualify for a refinance with your retirement income.

Read on to learn more about refinance programs for seniors, along with home loan refinancing options available to you during retirement:

How to refinance for seniorsRefinance program options for seniorsShould a senior refinance their mortgage?

How to refinance for seniors

The steps to refinance as a senior are essentially the same as the steps to refinance as a younger adult. One of the main differences is that you might be submitting Social Security statements instead of W-2s, and your assets could play a bigger role than your income in qualification.

Here’s how the refinancing process generally works:

Establish your goals for refinancing Ask yourself if you want a lower interest rate, a longer or shorter loan term, a pile of cash, or all of these.Check your credit. Figure out if your credit score is high enough to qualify for a conventional refinance or if you might want to consider an FHA refinance.Gather your most recent statements. Get statements from Social Security, your pension, your retirement accounts, and any other documentation of your income and assets.Shop around. Request quotes from several mortgage lenders to learn about your refinancing options.Choose the right loan. Find a loan that offers the best value and meets your needs.Apply for the loan and begin the underwriting process Promptly supply any additional documentation your lender requests, such as signed tax returns and proof of homeowners insurance.Close. Close on your refinance and enjoy your improved financial situation.

Refinance program options for seniors

Employment income is not a requirement to get a mortgage, and lenders aren’t allowed to discriminate based on an applicant’s age (you just have to be old enough to legally agree to a contract). So, you can still qualify for a mortgage if you’re over the age of 60 or retired.

Along with Social Security income, lenders will count distributions from retirement accounts, such as 401(k)s and Roth IRAs, as long as their calculations show that this income will be available for at least three years after closing.

Important: Government refinance programs for seniors aren’t really a thing. While many mortgages are guaranteed or supported in some way by federal taxpayers, these mortgages are open to all adult homeowners who qualify financially. State housing finance agencies sometimes have programs to help struggling senior homeowners, however.

Rate and term refinance

A rate and term refinance, also known as a traditional refinance, is a type of mortgage refinancing that meets Fannie Mae or Freddie Mac’s requirements. It can be the most cost-effective way for seniors in good financial standing to refinance their home loan.

A conventional rate and term refinance can give you a lower interest rate, shorter term, or both. If you have at least 20% equity, you won’t have to pay for private mortgage insurance, and these loans don’t have the additional costs that FHA and VA loans do.

Cash-out refinance

Seniors who want to do a cash-out refinance have many options, including a conventional loan, HomeReady cash-out refinance, FHA cash-out refinance, and VA cash-out refinance. This mortgage type will be most helpful if you can get a lower rate on your existing mortgage in the process. If not, a second mortgage might be a less expensive option.

Increasing how much you owe on your home during retirement goes against the conventional wisdom of paying off your mortgage before retirement. Still, it’s always worth checking to see if the usual advice makes sense in your situation.

When mortgage rates are low and you have enough cash flow from retirement accounts, Social Security, and other assets to make monthly mortgage payments, a cash-out refinance can be a good option to explore. It can help you unlock some of the equity in your home and allow you to enjoy your retirement more. Credible makes it easy to compare refinancing options.

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Fannie Mae HomeReady refinance

This loan may be a good fit for seniors because it’s designed for low-income borrowers. In 2021, the average monthly Social Security benefit for retired workers is $1,555, and it’s the sole source of income for many retirees.

Low-income borrowers whose existing mortgage is owned by Fannie Mae may be eligible for a HomeReady refinance. This loan merely requires that you have a credit score — no minimum score applies. The income limit to qualify is 80% of the area median. You only need to have 3% equity (97% LTV).

Fannie Mae RefiNow

This refinance program can help lower-income borrowers who have a Fannie Mae mortgage. You may be eligible if your income doesn’t exceed specified limits for your area, you haven’t missed more than one payment in the last 12 months (and no missed payments in the last six months), and you have a credit score of 620 or higher.

With this loan, you can finance your closing costs as long as your new monthly payment will be lower and your interest rate will be at least 0.5% lower. Your debt-to-income ratio (DTI) can be as high as 65% and Fannie Mae will cover the appraisal fee.

Good to know: Most loans don’t allow a DTI higher than 50%. A generous DTI limit can help seniors whose retirement income is lower than their working income.

Freddie Mac Enhanced Relief Refinance

If your home loan is owned by Freddie Mac but your loan-to-value ratio is too high to qualify for a standard refinance — perhaps your mortgage is underwater — you may want to consider this program.

A high LTV ratio typically results in a higher rate, but the goal of this program is to make homeowners’ payments more affordable with a lower rate, shorter term, or fixed rate instead of an adjustable rate. A mortgage that can help you stretch your limited resources in retirement is worth a look.

Renovation refinance

Just because you’re a senior doesn’t mean you stop wanting to improve your home. In fact, renovations can be extra important to seniors who want to stay in their homes indefinitely. Certain improvements can make homes safer and more accessible as strength and mobility decline, and everyone needs a watertight roof over their head.

Renovation loans, like the Fannie Mae HomeStyle Renovation and Freddie Mac CHOICERenovation, can help senior homeowners replace their old mortgage with a new mortgage while also financing home improvements.

Tip: Renovation mortgages require you to jump through extra hoops to complete renovations, like submitting copies of purchase contracts and specifications to your lender and getting lender approval for change orders. You might prefer a more straightforward option to pay for your home improvements, such as a cash-out refinance or home equity line of credit.

FHA streamline refinance

Seniors who already have an FHA loan may want to consider an FHA streamline refinance. This loan doesn’t require an appraisal or credit check, which saves you money and allows you to refinance even if your home’s value has decreased or your credit has gotten worse.

An FHA streamline refinance is meant to provide a lower interest rate when refinancing from one fixed-rate mortgage to another, or payment stability when refinancing from an adjustable-rate to a fixed-rate mortgage. Stability and saving money are valuable benefits for seniors who need their retirement income and savings to go as far as possible.

Tip: Because of the expensive mortgage insurance required with FHA loans, seniors who qualify may be better off with a conventional loan. It’s also not the right choice if you need to cash out some of your equity.

VA IRRRL

Qualifying military service members with a VA loan may want to consider refinancing into a VA interest rate reduction refinance loan (IRRRL). Similar to an FHA streamline refinance, a VA IRRRL may be appealing if your income or home value has decreased. A drawback to this loan is the VA funding fee you’ll have to pay, which equates to 0.5% of the loan amount.

Learn More: VA Refinance: 3 Ways to Refinance a VA Loan

Should a senior refinance their mortgage?

Seniors who want to be debt free in retirement may not want to refinance into a longer loan term. However, you might be surprised to find that lenders offer terms other than 15- or 30-year mortgages. If you currently have eight years left on your mortgage and you don’t want to restart the clock on a 15-year loan, ask about refinancing into a five-, eight-, or 10-year loan.

Being debt-free isn’t an important (or realistic) goal for many seniors, though. If this describes your situation, you may want to refinance to take advantage of the equity in your home. As long as you can afford the monthly payments on your new loan, refinancing can allow you to access more equity at a lower cost than a reverse mortgage would.

Tip: Like all homeowners, as a senior, you’ll want to consider the breakeven period before refinancing. For instance, if you might move before recouping your closing costs, you may want to skip it.

There are a few other things you’ll want to consider before refinancing your mortgage as a senior. Think about whether you might end up downsizing, moving in with a relative, or relocating to a senior living community as you age. And, if you’re married, also think about whether you or your spouse might want to move out upon the other’s passing.

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