How Rising Inflation Affects Mortgage Interest Rates

Rising inflation can shrink purchasing power as prices of goods and services increase. This, in turn, can affect interest rates and the cost of borrowing. While the inflation rate doesn’t have a direct impact on mortgage rates, the two do tend to move in tandem.

What does that mean for homebuyers looking for a home loan and for homeowners who want to refinance a mortgage? Simply that as inflation rises, mortgage rates may follow suit.

Understanding the difference between the inflation rate and interest rates, and what affects mortgage rates for different types of home loans, matters in terms of timing.

Inflation Rate vs. Interest Rates

Inflation is defined as a general increase in the overall price of goods and services over time.

The Federal Reserve, the central bank of the United States, tracks inflation rates and inflation trends using several key metrics, including the Consumer Price Index, to determine how to direct monetary policy.

What to Learn from Historical Mortgage Rate Fluctuations

Inflation Trends for 2021 and Beyond

As of May 2021, the U.S. inflation rate had hit 5% as measured by the Consumer Price Index, representing the largest 12-month increase since 2008 and moving well beyond the 2% target inflation rate the Federal Reserve aims for.

While prices for consumer goods and services were up across the board, the biggest increase overall was in the energy category.

Rising inflation rates in 2021 are thought to be driven by a combination of things, including:

• A reopening economy

• Increased demand for goods and services

• Shortages in supply of goods and services

The coronavirus pandemic saw many people cut back on spending in 2020, leading to a surplus of savings. State reopenings have spurred a wave of “revenge spending” among consumers.

Although the demand for goods and services is up, supply chain disruptions and worker shortages are making it difficult for companies to meet consumer needs. This has resulted in steadily rising inflation.

Fed Chair Jerome Powell said in June 2021 that he anticipates a continued rise in the U.S. inflation rate in 2021. This is projected to be followed by an eventual dropoff and return to lower inflation rates in 2022.

In the meantime, the Fed has discussed the possibility of an interest rate increase, though there are no firm plans to do so yet. Some Fed bank presidents, though, have forecast an initial rate increase in 2022.

Recommended: 7 Factors that Cause Inflation – Historic Examples Included

Is Now a Good Time for a Mortgage or Refi?

It’s clear that there’s a link between inflation rates and mortgage rates. But what does all of this mean for homebuyers or homeowners?

It simply means that if you’re interested in buying a home it could make sense to do so sooner rather than later. Despite the economic upheaval in 2020 and the rise in inflation that’s happening now, mortgage rates have still held near historic lows. If the Fed decides to pursue an interest rate hike, that could have a trickle-down effect and lead to higher mortgage rates.

good mortgage rate, especially as home values increase.

The higher home values go, the more important a low-interest rate becomes, as the rate can directly affect how much home you’re able to afford.

The same is true if you already own a home and you’re considering refinancing an existing mortgage. With refinancing, the math gets a bit trickier.

You might want to determine your break-even point when the money you save on interest charges catches up to what you spend on closing costs for a refi loan.

To find the break-even point on a refi, divide the total loan costs by the monthly savings. If refinancing fees total $3,000 and you’ll save $250 a month, that’s 3,000 divided by 250, or 12. That means it’ll take 12 months to recoup the cost of refinancing.

If you refinance to a shorter-term, your savings can multiply beyond the break-even point.

If your current mortgage rate is above refinancing rates, it could make sense to shop around for refinancing options.

Keep in mind, of course, that the actual rate you pay for a purchase loan or refinance loan can also depend on things like your credit score, income, and debt-to-income ratio.

Recommended: How to Refinance Your Mortgage – Step-By-Step Guide 

The Takeaway

Inflation appears to be here to stay, at least for the near term. Understanding what affects mortgage rates and the relationship between the inflation rate vs. interest rates matters from a savings perspective.

Buying a home or refinancing when mortgage rates are lower could add up to a substantial cost difference over the life of your loan.

SoFi offers fixed-rate home loans and mortgage refinancing. Now might be a good time to find the best loan for your needs and budget.

It’s easy to check your rate with SoFi.

Photo credit: iStock/Max Zolotukhin


SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

SoFi Home Loans
Terms, conditions, and state restrictions apply. SoFi Home Loans are not available in all states. See SoFi.com/eligibility for more information.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Source: sofi.com

LTV 101: Why Your Loan-to-Value Ratio Matters

Are you thinking about taking out a home loan or refinancing your mortgage? If so, knowing your loan-to-value (LTV) ratio, or the loan amount divided by the value of the property, is important.

Let’s break down LTV: what it is, how to calculate it, and why it matters. (Hint: It could help save you a lot of money.)

LTV, a Pertinent Percentage

The relationship between the loan amount and the value of the asset securing that loan constitutes LTV.

To find the loan-to-value ratio, divide the loan amount by the value of the property.

LTV = (Loan Value / Property Value) x 100

Here’s an example: Say you want to buy a $200,000 home. You have $20,000 set aside as a down payment and need to take out a $180,000 mortgage. So here’s what your LTV calculation looks like:

180,000 / 200,000 = 0.9 or 90%

Here’s another example: You want to refinance your mortgage (which means getting a new home loan, hopefully at a lower interest rate). Your home is valued at $350,000, and your mortgage balance is $220,000.

220,000 / 350,000 = 0.628 or 63%

As the LTV percentage increases, the risk to the lender increases.

Why Does LTV Matter?

Two major components of a mortgage loan can be affected by LTV: the interest rate and private mortgage insurance (PMI).

Interest Rate

LTV, in conjunction with your income, financial history, and credit score, is a major factor in determining how much a loan will cost.

When a lender writes a loan that is close to the value of the property, the perceived risk of default is higher because the borrower has little equity built up—and therefore, little to lose.

Should the property go into foreclosure, the lender may be unable to recoup the money it lent. Because of this, lenders prefer borrowers with lower LTVs and will often reward them with better interest rates.

Though a 20% down payment is not essential for loan approval, someone with an 80% LTV is likely to get a more competitive rate than a similar borrower with a 90% LTV.
The same goes for a refinance or home equity line of credit: If you have 20% equity in your home, or at least 80% LTV, you’re more likely to get a better rate.

If you’ve ever run the numbers on mortgage loans, you know that a rate difference of 1% could amount to thousands of dollars paid in interest over the life of the loan.

Let’s look at an example, where two people are applying for loans on identical $300,000 properties.

Person One, Barb:

•  Puts 20%, or $60,000, down, so their LTV is 80%. (240,000 / 300,000 = 80%)

•  Gets approved for a 4.5% interest rate on a 30-year fixed-rate mortgage

•  Will pay $197,778 in interest over the life of the loan

Person Two, Bill:

•  Puts 10%, or $30,000, down, so their LTV is 90%. (270,000 / 300,000 = 90%)

•  Gets approved for a 5.5% interest rate on a 30-year fixed-rate mortgage

•  Will pay $281,891 in interest over the life of the loan

Bill will pay $84,113 more in interest than Barb, though it is true that Bill also has a larger loan and pays more in interest because of that.

So let’s compare apples to apples: Let’s assume that Bill is also putting $60,000 down and taking out a $240,000 loan, but that loan interest rate remains at 5.5%. Now, Bill pays $250,571 in interest;

The 1% difference in interest rates means Bill will pay nearly $53,000 more over the life of the loan than Barb will.

Mortgage CalculatorMortgage Calculator

PMI or Private Mortgage Insurance

Your LTV ratio also determines whether you’ll be required to pay for PMI. PMI protects your lender in the event that your house is foreclosed on and the lender assumes a loss in the process.

Your lender will charge you for PMI until your LTV reaches 78% (by law, if payments are current) or 80% (by request).

PMI can be a substantial added cost, ranging from 0.5% to 2.25% of the value of the loan per year. Using our example from above, a $270,000 loan at 5.5% with a 1% PMI rate translates to $225 per month for PMI, or about $18,800 in PMI paid until 20% equity is reached.

How Does LTV Change?

LTV changes when either the value of the property or the value of the loan changes.

If you’re a homeowner, the value of your property fluctuates with natural market pressures. If you thought the value of your home increased significantly since your last appraisal, you could have another appraisal done. You could also potentially increase your home value through remodels or additions.

The balance of your loan should decrease over time as you make monthly mortgage payments, and this will lower your LTV. If you made a large payment toward your mortgage, that would significantly lower your LTV.

Whether through an increase in your property value or by reducing the loan, decreasing your LTV provides you with at least two possible money-saving options: removal of PMI and refinancing to a lower rate.

The Takeaway

The loan-to-value ratio affects two big components of a mortgage loan: the interest rate and private mortgage insurance. A lower LTV percentage typically translates into more borrower benefits.

Whether you’re on the hunt for a new home loan or a refinanced mortgage, it’s a good idea to shop around for the best deal. Check out what SoFi has to offer.

See if a SoFi mortgage or refi is a good fit in just a few clicks.


SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

SoFi Home Loans
Terms, conditions, and state restrictions apply. SoFi Home Loans are not available in all states. See SoFi.com/eligibility for more information.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Source: sofi.com

Compound Finance (COMP) in DeFi, Explained

What Is Compound Finance?

Compound Finance is a marketplace used by crypto investors to lend and borrow their digital assets. Compound crypto is a decentralized protocol, or dApp, built on a blockchain.

Users can also vote on the governance structure of the Compound protocol using the COMP token.

Compound is part of a new system of decentralized finance enabled with the invention of blockchain technology. It’s built by the open-source software development company Compound Labs.

Before diving into the details of Compound Finance, let’s explore the topic of decentralized finance. This will help with understanding how Compound fits into the picture.

Compound Crypto and Decentralized Finance (DeFi)

DeFi is an important term in the crypto ecosystem. The philosophy behind DeFi is to decentralize the full suite of financial services available to individuals and businesses. These include insurance, taxes, lending, borrowing, credit, and more. In decentralized finance, there is no need for a centralized body or intermediary such as a bank to hold money, facilitate, or validate transactions. Decentralization can also apply to the way cryptocurrencies are created and governed.

Many DeFi services are built on the Ethereum blockchain. The blockchain allows anyone to build decentralized applications (dApps) with their own unique cryptocurrencies. These applications can utilize smart contracts which allow for complicated transactions, lending, borrowing, and other functionality.

Blockchain technology has enabled the decentralization of money, payments, and financial services. For example individuals and companies all over the world can mine Bitcoin, and it isn’t held or controlled by any central authority. Anyone who holds Bitcoin can send it to someone else without using the services of a bank or even an exchange. In order for changes to be made to the functionality of the Bitcoin blockchain, miners vote. Changes require a majority.

Despite the growth in DeFi and cryptocurrency there are still many financial services left to be decentralized, such as lending and borrowing. Compound is a liquidity pool that allows cryptocurrency owners to lend and borrow their digital assets.

Recommended: A Guide to Decentralized Finance (DeFi)

How Does Compound Finance Work?

Compound is a dApp that gives users the ability to crypto stake their digital assets and lend or borrow certain cryptocurrencies. Supported assets on Compound include:

•  Ether (ETH)

•  Dai (DAI)

•  Ox (ZRX)

•  Tether (USDT)

•  USD Coin (USDC)

•  Wrapped BTC (WBTC)

•  Sai (SAI)

•  Augur (REP)

•  Basic Attention Token (BAT)

Anyone who owns those assets can engage in crypto lending or borrowing using Compound without dealing with traditional financial institutions. Compound has gained significant popularity in recent years, there are more than $12.4 billion in assets on the platform.

cTokens

When a user locks in funds on the lending side of the Compound protocol, they receive cTokens, or digital assets representing the amount that they have deposited. cTokens are an ERC-20 token built using the Ethereum blockchain protocol. There are different cTokens for each crypto on the Compound platform, including cETH, cBAT, and cDAI. Users receive the token associated with the crypto they deposited.

Owners of the tokens can transfer, trade, or use them on other dApps. The tokens will continue to earn interest on the Compound protocol while they are being used throughout the DeFi ecosystem. cToken holders control their public and private keys just as they would with Bitcoin or another cryptocurrency. Ultimately the cToken can only be redeemed for the particular crypto that it represents.

Interest Rates

The Compound protocol automatically calculates and issues interest rates based on the liquidity available for each cryptocurrency offered on the platform. The rates fluctuate based on supply and demand in the market and change constantly. If there is a lot of money held in the Compound wallet, the interest rates are low. This is because there is a lot of money available for borrowers, so lenders don’t earn very much in exchange for adding more to the pool.

However, if the pool of money for a particular cryptocurrency is small, the interest rates are higher. This creates an ongoing incentive for users to lock funds into pools that contain less funds, so that they will earn a higher rate. It also incentivizes borrowers to borrow from large pools and to repay borrowed funds into smaller pools so that they will pay lower interest rates.

The Compound dashboard shows an annual interest rate which is what users get quoted. Every 15 seconds, any cTokens held by a user increase by 1/2102400 of the quoted annual interest rate for that particular moment. That fraction is the number of 15 second blocks there are in a year.

Compound Finance Transactions

Lending and borrowing transactions occur instantly using the protocol. There are no intermediary requirements or costs involved, it’s only required that borrowers have deposited funds on the lending side. The decentralization and automatically executionable smart contracts make the process easier, faster, and less expensive than going through a traditional financial institution.

Lending

Those who own these cryptocurrencies can lend any amount of them, also referred to as locking, sending, or depositing. This is similar to depositing fiat currency into a savings account that starts earning interest immediately. However, unlike depositing into a bank account, the Compound dApp is decentralized, and the money goes into a large pool along with other investor’s deposits of any particular cryptocurrency. Whichever crypto the lender deposits is the currency in which they’ll receive payments.

Borrowing

The other main feature of the Compound protocol is the ability to borrow against deposited and locked funds. Any user who puts part of the cryptocurrency portfolio into the Compound pool can immediately borrow against those funds without any credit check or additional requirements. The amount a user can borrow depends on how much they deposit, and each cryptocurrency has different rates.

Borrowers must deposit more than they intend to borrow to ensure that their funds are collateralized. This means there are funds available to pay off the loan if the user doesn’t pay back the installments and interest. Cryptos also fluctuate in value, so if the collateralized amount decreases in value, the borrower cToken smart contract automatically closes when the value gets close to the borrowed amount. If this occurs, the borrower keeps the cTokens they borrowed but they lose the collateral they deposited.

Just like if they borrowed from a bank or other financial institution, borrowers must pay interest on the amount of funds they borrow. The Compound protocol automatically determines and implements the interest rates, which varies with each cryptocurrency on the platform.

How Does Compound’s Governance Work?

The Compound protocol also has a decentralized governance system in which users can participate, depending on the amount of COMP tokens they hold. COMP tokens are governance tokens, and all lenders and borrowers receive a particular amount of them every 15 seconds when an Ethereum block is mined. The amount users receive is related to the interest rates of each crypto asset and the number of transactions that they partake in using the protocol.

When a user owns 1% or more of the total supply of COMP tokens, they can participate in the governance system by submitting and voting on any proposals to make changes to the Compound blockchain system. Every COMP token counts for one vote.

The Takeaway

The DeFi ecosystem is constantly expanding to include more options for decentralized financial services, including Compound Finance. DeFi is a complicated system of decentralized exchanges that provide an opportunity for some crypto investors to lend or borrow their digital assets.

If you’re interested in starting to invest in cryptocurrencies, one simple way to get started is using the SoFi Invest® crypto trading platform. The investing platform lets you research, track, buy, and sell popular cryptocurrencies right from your phone. You can see your portfolio information in one simple dashboard. In addition to crypto, SoFi allows you to also invest in stocks and other assets all in one place. If you need help getting started, SoFi has a team of professional financial advisors available to answer your questions and help you create a personalized investing plan.

Photo credit: iStock/ijeab


Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments.
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The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
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Source: sofi.com

Student Loan Deferment vs Forbearance: What’s The Difference?

If you’re struggling to keep up with student loan payments, rest assured you are not alone. In fact, 17% of those with education-related debt were behind on payments in 2019, according to the Federal Reserve .

There are many reasons why you may be having difficulty with your loans. Some students may struggle to find a job after graduation, or some may not earn as much as they anticipated right out of the gate.

When monthly student loan payments become insurmountable, the worst thing to do is nothing at all. When a borrower stops paying their student loans, they may go into default. This has the potential to devastate an individual’s credit score.

In default, borrowers could also face relentless collection agencies or could even have their wages garnished. Plus in most cases, student loans can’t be discharged even if the borrower files for bankruptcy.

But take heart: Those borrowers with federal student loans may have options for pausing or temporarily reducing their monthly payments, if they’ve found themselves in a tough financial spot. Namely, borrowers can apply for either student loan deferment or forbearance from the federal government in order to avoid default.

It can be tough to figure out the difference between these two programs and which is best for your situation. Here’s a breakdown of the differences between deferment and forbearance:

What Is The Difference Between Deferment and Forbearance?

Let’s start with the similarities: Both deferment and forbearance allow a borrower to temporarily lower or stop making payments on their federal student loans for a defined period of time, if they qualify.

In both cases, the borrower needs to contact their loan servicer, submit a request, and provide the documentation requested by the loan service.

The main difference between the two is that, while in deferment, borrowers are not required to pay the interest that accrues if they have a qualifying loan .

Specifically, interest is not owed on Direct Subsidized Loans, Subsidized Federal Stafford Loans, Federal Perkins Loans, and subsidized portions of Direct Consolidation Loans or Federal Family Education Loan Program (FFEL) Consolidation Loans.

Interest payments are still required on Direct Unsubsidized Loans, Unsubsidized Federal Stafford Loans, Direct PLUS Loans, FFEL Plus Loans, and unsubsidized portions of Direct Consolidation Loans and FFEL Consolidation Loans.

With federal student loan forbearance, borrowers are always responsible for paying the interest that accrues, regardless of what kinds of federal loans you have.

You can either pay the interest as it adds up, during the forbearance period, or you can have it capitalized (added to the principal) at the end, which could increase the total amount you repay.

Who Is Eligible for Deferment?

Overall, deferment is tailored to people who are having economic difficulties because, for example, they’re in school at least half-time, in the military, in another eligible post-graduate role, or can’t find a full-time job.

Here are more details: Federal student loan borrowers may qualify for deferment if they are enrolled at least half-time at an eligible college or vocational school, and if they’re in an approved graduate program, for six months after enrollment ends.

Individuals may also be eligible if they are in an approved graduate fellowship, in an approved rehabilitation training program for disabled people, on active duty with the military (and for 13 months afterward), or are serving in the Peace Corps.

Related: Examining How Student Loan Deferment Works

Finally, unemployed individuals are also able to apply for deferment. In the case of unemployment and the Peace Corps, you may be granted deferment for a maximum of three years. Review all the possible eligibility scenarios at the Department of Education’s webpage about deferment .

Who Is Eligible for Forbearance?

There are two kinds of forbearance : mandatory and general.

Mandatory Forbearance

Loan servicers are required to grant mandatory forbearance to qualifying borrowers. Depending on the type of federal student loan, borrowers may be eligible if they are in a medical or dental internship or residency, serving in AmeriCorps or the National Guard, or working as a teacher and performing a teaching service that qualifies for teacher loan forgiveness.

Borrowers may also qualify if their monthly student loan payment is at least 20% of their gross monthly income, for up to three years, again depending on the type of loan you have. Note: Mandatory forbearance is granted for up to a year at a time. After that, borrowers can request it again.

General Forbearance

With general forbearance, it’s up to the loan servicer to decide whether to grant it, only certain federal student loans are eligible (Direct Loans, FFEL, and Perkins Loans), and like mandatory forbearance, general forbearance can only be granted for 12 months at a time. There is a three-year cumulative limit on general forbearances.

Borrowers can apply for a general forbearance if they’re unable to make loan payments because of financial hardship, medical bills, or changes in their job (such as reduced pay or unemployment). If there are other reasons they’re unable to pay, it’s also possible to make that case to the loan servicer, but the decision will be theirs to make. Check out all the possible eligibility scenarios at the Department of Education’s webpage about forbearance .

Forbearance vs Deferment for Student Loans: Which Option to Choose?

If your federal student loan type and circumstances allow you to, getting a deferment can be a no-brainer since it’ll allow you to get a break on interest during the deferment period. If you’ve already exhausted the maximum time for a deferment, or your situation doesn’t fit the narrow eligibility criteria, then it could make sense to apply for a forbearance.

If your ability to afford your loan payments is unlikely to change anytime soon, or if you have private loans or federal loans that don’t qualify for a deferment or forbearance program, you may want to consider other solutions, such as an income-driven repayment plan or student loan refinancing.

How Does an Income-Driven Repayment Plan Work?

Another way to potentially reduce your federal student loan payment is to apply for an income-driven repayment plan. The government offers four different income-driven plans that tie the borrower’s monthly payment to their discretionary income, while considering other factors including family size.

The plan a borrower qualifies for depends on the type of loan they have and when it was borrowed. Depending on the plan, your monthly payment will generally be reduced to between 10% and 20% of your discretionary income. If you make the required qualifying payments every month, your balance can be forgiven in 20 or 25 years.

There are lots of specific qualifying factors and important details to consider for this repayment option. For more information, The Department of Education offers resources for borrowers to review.

How Can Student Loan Refinancing Help?

For some borrowers, refinancing student loans can be an option that helps them reduce their monthly payment or interest rate. Refinancing involves taking out a new loan from a private lender and using it to pay off existing federal or private loans, effectively combining multiple loans into one.

The new loan will have a new term and interest rate, which has the potential to help borrowers save on interest or the amount they pay over the life of the loan. Borrowers with a solid credit score and employment history (among other positive financial indicators) are especially likely to be able to qualify for favorable terms.

With SoFi, it’s possible to refinance loans without paying any hidden fees or penalties at either a fixed or variable interest rate.

Keep in mind that if you refinance federal loans, you will no longer qualify for the federal benefits we discussed in this post, including deferment, forbearance, or income-driven repayment programs.

However, some private lenders do offer temporary relief if you experience financial hardship. Rather than stopgaps that can require you to re-apply year after year, refinancing can help you gain a long-term plan for getting your payments under control.

The Takeaway

Deferment and forbearance are both options that allow borrowers to temporarily pause payments on their federal student loans.

Deferment differs from forbearance in that some borrowers may not be required to pay interest that accrues during deferment, depending on the type of loan they have. With forbearance, borrowers are generally required to cover interest that accrues while the loan is in forbearance.

Borrowers who anticipate having trouble making monthly federal student loan payments in the long-term might consider applying for income-driven repayment plans, which ties monthly payments to the borrower’s income level.

Other individuals may consider refinancing to secure a more competitive interest rate or a lower monthly payment. Note that a lower monthly payment generally extends the repayment terms and is more expensive in the long run.

Refinancing federal student loans eliminates them from borrower protections, including deferment, forbearance, and income-driven repayment plans, so it won’t make sense for borrowers with federal loans who are taking advantage of those programs.

Learn more about refinancing with SoFi. Potential borrowers can prequalify in a few minutes.


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SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

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IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF SEPTEMBER DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’swebsite .
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Source: sofi.com

A Guide to Student Loan Refunds

Nobody wants student loan debt. Higher education can be a worthwhile pursuit but it can come with some hefty tuition, housing, and living expenses that many students and their parents need to take out student loans to cover.

There is some good news regarding student loans that a lot of people don’t know about. Getting your hands on a student loan refund check is possible. This guide will break down what a student loan refund is, how to get one, and what to do with one.

What Is a Student Loan Refund?

To understand what a student loan refund is, it can be helpful to first look at what financial aid is and how it is distributed to students. When a student or their parent pursues federal financial aid, such as a student loan, that aid is distributed via a credit to the student’s account at their college.

Private student loans are distributed differently depending on the lender’s preferences. Some private lenders may deliver the funds directly to the student in a mailed check.

Others may choose to credit the student’s college account similar to how federal aid is distributed.

Private or federal, this is where student loan refunds may come into play. Student financial aid can cover costs such as tuition, room and board, and fees.

On occasion, an aid distribution can lead to there being an additional credit in the student’s college account.

This happens if there is any excess money after paying for the necessary expenses. In that case, the student or parent will receive a student loan refund via a check or in the form of a direct deposit to their bank account.

How To Get a Student Loan Refund

Whether a student or a parent takes out a federal student loan, the process of getting a student loan refund will generally look similar. Each semester, the school will generally review student accounts to determine if there are any eligible credit balances that can be refunded to the student.

In that case, the school has 14 days to issue a payment to the student if there is credit on their account. In some cases, schools may determine that credit balances should be applied to student’s future costs at the university.

In some cases, if the credit is not a result of the student receiving financial aid, the school may require that students request a refund. Follow the refund request process as determined by the school you attend.

In general, the school in question will contact the student or their parents in writing any time they distribute any loan money. The loan servicer will also provide confirmation that the loan money was delivered.

Alongside this notice, borrowers will generally also receive information on how to cancel part or all of the student loans. If the borrower realizes they don’t need the full loan amount, this may be an option they want to pursue.

Know that any amount refunded is still considered part of the total amount borrowed. So, borrowers who receive a portion of their student loans refunded would still be responsible for repaying that amount, with interest, if the refund is not canceled.

If this is the case, when it comes to federal student loans, the borrower can cancel all or part of their loan within 120 days of receiving it. They will incur no interest during this time and no fees will be charged.

The process of getting student loan refunds may vary when dealing with private lenders.

Recommended: Is Paying Off Student Loans Early Always Smart?

Common Refund Mistakes

When it comes to student loan refunds, there are a few common pitfalls that students and their parents should avoid. Especially if they want to get their hands on a student loan refund check sooner rather than later.

Moving too slow

Requesting a student loan refund is a bit of a time sensitive process. If someone realizes they won’t need the full amount of a federal student loan awarded before the funds are disbursed, they can actually request the school cancel the check or deposit before the need to process a refund even arises.

If the borrower realizes after distribution of a federal student loan that they don’t need all or any of the funds, they have 120 days post-disbursement to return the funds without incurring interest or fees.

If a borrower misses both of these opportunities, the process of working with their school’s financial aid office to return the funds can become more complicated and time consuming.

Not establishing a paper trail

When making a student loan refund request, it may be a good idea to keep a paper trail of all requests and communication in order to establish a clear history of a desire to return the unused funds. If things get lost in translation (which could happen), having a paper trail can be extremely helpful.

Over relying on student loans

Some students and their parents lean too heavily on student loans and may be able to get a bigger refund if they can find another way to finance any qualified education expenses. Student loans can be used to pay for academic and living expenses for the student while they’re in school.

However, pursuing other forms of financial support, such as a work-study program can allow students to send more of their aid funds back, which will leave them with less loans when they graduate.

While it can be tempting to use a student loan refund to cover extra expenses like clothing and transportation—the less that is borrowed, the less that will be owed at graduation.

What to Do With a Student Loan Refund

When a student or their parent gets a student loan refund, they have two main options. They can keep it or return it. Typically, it may be beneficial in the long run to return the funds if they aren’t needed. Try to avoid viewing student loan disbursements as free money that can be spent on anything.

This is money the borrower will have to pay back (with interest) and spending it on unnecessary expenses can be quite a disservice to the borrower.

That being said, borrowers won’t have to submit any proof of what they spent the funds on, which is why it can be so easy to stray from only using it for qualified expenses.

If the borrower chooses to keep the student loan refund check, or miss the deadline to return it, there are still some next steps available to them. One such option is to make a payment on their student loan balance.

Even though federal student loans don’t require payment until the student graduates, this can be one way to cut down student loan debt. The borrower can also use those funds for expenses in the next term and as a result can choose to borrow less money for that term.

Refinancing Student Loans

All that hard work has finally paid off. It’s time to cross that graduation stage. Once graduation day rolls around, students and their parents will begin to think about how they want to manage and pay off their student loan debt.

One option that can lead to saving money on interest and potentially expedite the repayment process is to refinance student loans.

When someone refinances a student loan, they get a new loan at a new interest rate and/or a new term. If a borrower initially had more than one student loan, this leaves the borrower with only one monthly payment to make instead of multiple and in some cases can lead to a lower interest rate.

The Takeaway

Refinancing student loans with SoFi can help qualifying borrowers secure a competitive interest rate, and potentially save money in interest over the life of the loan. There are also no hidden fees. It’s time to send origination fees and prepayment penalties packing.

Refinancing can be a solid solution for graduates who are working and have high interest, unsubsidized Direct Loans, Graduate PLUS loans, and/or private loans.

It’s worth noting that when someone refinances their federal student loans, they will lose federal benefits such as Public Service Loan Forgiveness and economic hardship protections, like deferment or forbearance.

When someone refinances their student loans with SoFi, they also gain access to unique perks like career coaching and financial advice, at no cost to them.

Learn more about student loan refinancing with SoFi and get a quote to see if you prequalify, and at what rates, in just a few minutes.



Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
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SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF SEPTEMBER DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Source: sofi.com

What Is the Bitcoin Lightning Network? How Does It Work?

The Lightning Network, or “Lightning” for short, provides a way for Bitcoin users to make small transactions without hefty fees or long confirmation times. While it’s not yet available to the average Bitcoin user, this innovation could one day solve Bitcoin’s biggest problems—high transaction fees and long confirmation times—both of which make smaller everyday payments unfeasible.

On the list of things to know before investing in crypto, Lightning doesn’t even crack the top five. But it may be an interesting topic for those interested in the technical side of blockchain technology, and for those who want to use Bitcoin as a means of payment.

What Is the Lightning Network?

Lightning is a decentralized network that uses smart contract functionality in the Bitcoin blockchain to facilitate instant payments across a network of users. It’s considered an off-chain or layer-2 solution because it involves activity that doesn’t occur directly on the blockchain.

Why Does Bitcoin Need Lightning?

Due to its decentralized nature, which requires consensus across a broad range of different computers, the Bitcoin network can only process about 7 transactions per second on average. Compare this to 24,000 transactions per second on average for a traditional credit card company like Visa.

Bitcoin forks since 2017.

Lightning provides a creative solution for these problems.

How Does the Bitcoin Lightning Network Work?

First, users must establish their own multi-signature Lightning wallet, and the two parties involved exchange a single key to validate their spending transactions. In this way, the transactions are kept from being broadcast on the main Bitcoin blockchain while also being verifiably accurate and real.

These off-chain (layer 2) transactions occur independently of on-chain (layer 1) transactions and don’t have to be updated on the main blockchain unless the two parties open or close a channel. Many Lightning Network transactions can occur before their record is broadcast to the blockchain. In this way, fees and confirmation times are greatly reduced.

Lightning uses multi-signature scripts and smart contracts to achieve its goals. When two parties initially fund a channel, this is called a “funding transaction.”

In effect, people are creating their own mini lightning networks when they open a Lightning wallet. Sometimes these multi-signature lightning wallets are referred to as “payment channels” or simply “channels.”

Example of How Bitcoin Lightning Network Works

As more and more people connect to Lightning, they don’t always have to create their own multi-signature wallet for each and every person they want to transact with. As the network grows, so do connections between wallets, and so long as there is a wallet with sufficient funds that the transaction can be routed through, then new users may be able to make use of existing wallets.

For example, imagine that James opens a channel with his local hardware store and deposits $50 of Bitcoin. His transactions with the hardware store can now be facilitated using the Lightning Network instantly.

Heather, who has a different channel open with her local smoothie shop, buys hardware from the same store as James. The connection between James, the grocery store, and Heather makes it possible for James to buy smoothies from the smoothie shop using the Lightning balance he has with the hardware store. Heather can also use her smoothie shop balance to facilitate transactions with other businesses within James’ network.

If Heather were to close her channel with the smoothie shop, then James would have to open a new channel with the smoothie shop to make Lightning purchases there, assuming there are no other available channels open. But as the Lightning Network grows, the idea is that in time, many different customers will have channels with many different merchants, and there will eventually be enough channels for everyone.

Lightning Network Developers

Who is developing the lightning network? There are a number of startups working on different implementations of lightning Bitcoin. The three main developers are listed below, each of them using a different programming language. Input is given from other members of the bitcoin community as well.

Lightning Labs

Lightning Labs focuses its efforts on creating a working model of the Lightning Network. The company is currently developing a Lightning Network Daemon written in the Golang programming language.

Blockstream

Blockstream is known for the creation of satellites that serve as backups for the Bitcoin blockchain in the event of anything catastrophic happening to miners or the electrical grid on Earth.

When it comes to Lightning, the company is working on a version written in the C programming language.

ACINQ

The company is developing Lightning using the Scala programming language.

It’s worth noting that while these versions are written in different languages, tests have shown that the three primary implementations could be interoperable, meaning they could all work together.

Pros and Cons of the Lightning Network

Perhaps the most important benefit of the Lightning Network is that it will allow Bitcoin to scale. Users will be able to make instant micropayments using Bitcoin without paying high fees. The famous example is buying a cup of coffee with Bitcoin, which is all but impossible at present due to high network fees and slow confirmation times.

One con includes the fact that as of the time of this writing, Lightning is not quite available for practical use. Because the project is still under development, it hasn’t yet been universally applied to real-world applications.

The average user will have difficulty making transactions using the Lightning network. Unless someone runs their own Lightning Bitcoin node, they won’t be able to receive payments while offline, and may or may not be able to open a channel with another person or merchant (who must also be using Lightning).

Can You Make Money Running a Lightning Node?

mining bitcoin does. There are several reasons someone might want to run a Lightning node, such as helping the Bitcoin network scale, increased privacy for personal transactions, and bypassing censorship in areas where governments have heavily regulated crypto and crypto exchanges.

Making money is not an incentive for running a Lightning node, however, as it typically doesn’t pay more than a few pennies per month at most. The hardware required to run a node will cost about $200-400 on average.

The simplest of tips for investing in Bitcoin might be to not run a full node unless you have a good reason or want to support the growth of the technology.

The Takeaway

The Lightning Network is a layer-2 solution that provides a way for Bitcoin to scale. It is still in the early experimental development phase, but once it becomes fully developed and widely adopted, it could help make Bitcoin more widely used as a digital medium of exchange.

While the Lightning Network will primarily benefit users interested in Bitcoin as a form of payment, there are other users who consider Bitcoin to be more of an investment. For those interested in investing in cryptocurrency like Bitcoin, Ethereum, and others, SoFi Invest® offers a secure platform that keeps assets protected from fraud, and the convenience of 24-hour trading through the SoFi app.

Find out how to get started with SoFi Invest.

Photo credit: iStock/MicroStockHub


Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments.
SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Source: sofi.com

Bitcoin Soft Fork vs Hard Fork: Key Differences

Cryptocurrencies evolve over time, adopting new network rules voted on by miners. This is known as forking. Since its invention in 2009, Bitcoin has forked many times—sometimes with a soft fork and sometimes with a hard fork.

Here’s a look at how each works, how they differ, and what they mean for investors.

Why Does Bitcoin Fork?

Developers, investors and miners will often call for a bitcoin fork because of disagreements on how best to manage the growth of Bitcoin. And while this has fueled innovation, none of the forks have come near to exceeding the usage and value of the original bitcoin blockchain, also called Bitcoin Core.

Recommended: What is Bitcoin and How Exactly Does it Work?

What Is A Hard Fork?

Hard forks happen when miners vote for a significant change to the Bitcoin blockchain protocol. A hard fork creates a new blockchain. And after a hard fork, both the old and new versions of the blockchains persist, separate and side by side.

What Is A Soft Fork?

Soft forks are more subtle software alterations of the blockchain. After a soft fork, the original blockchain remains valid, and users simply adopt the update.

Other Bitcoin Alterations

There are also other kinds of software alterations that create clone or copycat “altcoins.” In the history of Bitcoin, some of these created entirely new forms of crypto, such as Litecoin or Vertcoin.

The main difference is that while these “altcoins” used Bitcoin code as a jumping-off point, they didn’t add on to the existing Bitcoin blockchain. Instead, they created their own trading networks. These coins employ different mining algorithms, which means the computers that mine the coins operate on different software.

Main Differences Between Soft Forks and Hard Forks

Soft Fork Hard Fork
Backward Compatible? Yes No
Block Size Smaller Larger Speed Slower Faster Security Lower Higher

Backward Compatibility

One major difference between hard forks and soft forks comes down to something called “backward compatibility.” The term refers to the ability of a software system to use interfaces and data from earlier versions of the system.

The change of software protocol in a soft fork offers backward compatibility. While the new software may speak a new dialect, it still understands data in the old dialect. A hard fork is more like changing the language that the software speaks. It no longer understands what’s being said in the old language.

This is why a hard fork splits the network into two parts—the one before the fork and the one after. Because there is no backward compatibility, once forked the two parts of the network can never interact again. Transaction blocks that are valid in one network are no longer considered valid in the other one.

Block Size

One reason for a fork on a cryptocurrency like Bitcoin is to adjust the size of the blocks used in their blockchain. Those blocks hold transaction data, and the more data in each block, the faster the transaction.

Block size was one of the major reasons behind the first hard fork for Bitcoin, when a hard fork created Bitcoin Cash (BCH) in 2017. Because of its larger block size, one block in the BCH blockchain can record a larger number of transactions than a block in the original Bitcoin blockchain. That allows the currency to process more money faster.

Some forms of crypto may want to limit the size of the blocks to increase the payout to miners. This is where a soft fork can work, by adding a new set of rules to the existing blockchain to reduce block size from, say, 1MB to 500KB. With a soft fork, the 1MB block will still be considered valid by existing nodes, but as more nodes update to the soft fork, they may reject any blocks larger than 500KB.

A soft fork can only restrict the size of the blocks. It can only add new rules—it can’t change existing rules.

Speed and Security

Another famous use of a hard fork was done for the sake of blockchain security after a major hack. The Ethereum blockchain voted unanimously to hard fork as part of a strategy to reverse a hack that stole tens of millions of dollars’ worth of its coins. As a result, the original blockchain is now referred to as Ethereum Classic, and the fork became known as Ethereum.

That’s an extreme scenario. And there are many situations involving speed or volume or security that arise on a crypto network where a soft fork would get the job done.

But when a network needs to solve a problem quickly, hard forks have a major advantage. With both hard and soft forks, there’s a period when the old and new versions of the cryptocurrency’s code both live on the network. But with a hard fork, the old and new versions are divided clearly and forever on two separate networks.

With a soft fork, however, both versions will remain in place for however long it takes for all the users on the network to update the software. And there’s always the risk that the legacy version could win out. That’s why, when a hack or another major security issue is at play, the predominance of users and developers tend to prefer a hard fork.

Notable Bitcoin Forks in the Past

Bitcoin has forked on more than one occasion. In addition to Bitcoin Cash, these are some of the other notable forks:

•  Litecoin: Litecoin (LTC) was created to enable faster transactions, using the Scrypt algorithm rather than Bitcoin’s SHA-256 algorithm. LTC transactions are thought to confirm faster and have lower fees than BTC in general.

•  Vertcoin: Vertcoin (VTC) uses a different consensus algorithm for mining. The goal of VTC was to be ASIC-resistant, meaning that the market for mining couldn’t be taken over by people with access to resources for purchasing large and expensive ASIC (application-specific integrated circuit) computer hardware.

•  BSV: BSV is a hard fork from the Bitcoin Cash network, initiated by Craig Wright, who claims that he is in fact Satoshi Nakamoto, the creator of Bitcoin. (That remains unproven; Satoshi Nakamoto may in fact be a pseudonym for a group of people.)

•  Bitcoin Gold: This fork utilizes an ASIC-resistant proof-of-work mining algorithm, to create a coin that anyone can mine at home without the need for expensive specialized computer hardware.

Many of these cryptocurrencies forked from Bitcoin have undergone forks of their own. For instance Litecoin has had its own hard fork, which gave birth to Litecoin Cash.

But for all the improvements those forks have offered, Bitcoin is still the predominant cryptocurrency in the world today, with a market capitalization of $734,951,021,330 as of June 16, 2021, according to Coinmarketcap.com. Not that some of the forks are doing so badly. Bitcoin Cash and Litecoin boast market caps of $$11,339,133,478 and $11,303,929,705, respectively.

The Takeaway

As the original crypto, Bitcoin was the first to fork, and has forked a few times since—with both hard forks and soft forks. The hard forks, like Bitcoin Cash and Bitcoin Gold, created entirely new blockchains. Soft forks, on the other hand, are backwards compatible, meaning they work with the existing blockchain.

Some Bitcoin forks created entirely new altcoins, and thus additional investing opportunities for investors interested in crypto. SoFi Invest® offers members the opportunity to buy Bitcoin, Ethereum, Cardano, and 17 more coins—all from the convenience of the mobile app.

Find out how to get started with SoFi Invest.

Photo credit: iStock/I am 3D animator artist


Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments.
SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Source: sofi.com

How to Send Bitcoin

Learning how to send bitcoin is fairly straightforward, but it might seem intimidating for new users.

Generally, it requires only two basic things: a cryptocurrency wallet with some coins and a public key address to send a transaction to. Because Bitcoin is a peer-to-peer network, only the two people executing the transaction need to be involved. Depending on the type of wallet used, the exact look and feel of a bitcoin transfer could be slightly different. The process is generally the same for different types of cryptocurrency, too.

How To Send Bitcoin in 3 Simple Steps

With any wallet, the process of conducting a bitcoin transfer involves the same general steps:

1.   Enter the address of the wallet you want to send funds to. Users should always double-check the address they are sending to. Some hardware wallets will explicitly remind users to do this. When possible, using a QR code address might be preferable because it’s more certain.

2.   Enter the amount of bitcoin you wish to send. When entering the amount of bitcoin to send, some wallets might allow users to also select the amount in dollar terms. It’s important to notice which currency is being displayed. If a user’s wallet supports multiple cryptocurrencies, it’s also important to select the correct coin. Sending bitcoin (BTC) to a bitcoin cash (BCH) address, for example, would result in a permanent loss of funds. Sending any cryptocurrency to an address for another cryptocurrency will generally send them into a digital oblivion where they can’t be retrieved by any means.

3.   Broadcast the transaction by clicking “send”. When sending from some desktop wallets, users may be required to select the network fee before clicking send. Higher-fee transactions are given higher priority by bitcoin miners and will reach their destination in a shorter amount of time. (When using exchange-hosted wallets and most hardware wallets, the network fee amount will be automatically chosen for the user.)

For larger transactions, it’s a good idea to send a small amount of bitcoin as a test, to make sure the address is correct. A second transaction can then be made for the remaining amount.

Recommended: What is a Cryptocurrency Wallet and How Do I Get One?

How Do I Receive Bitcoin?

Learning how to receive bitcoin only requires that a user has a wallet and a public address for that wallet. To receive funds, simply provide the public address to the person who wants to send bitcoin.
There are really two steps needed to receive bitcoin:

1.   Open your wallet and select “receive” or “generate new address”. Your wallet should offer one of these options.

2.   Share the address with the bitcoin sender. The address can come in the form of a string of numbers and letters or as a QR code. The QR code can be sent as a picture or scanned directly by a smartphone.

There are also services that allow merchants to accept bitcoin as payment for goods and services. Most often, the service will convert the coins to local currency immediately and deliver the funds to the merchant in exchange for a small fee.

How Do I Send Bitcoin to Someone?

Learning how to send bitcoin depends on which wallet someone is using. Here is a brief overview of some of the most common types of hot and cold wallets.

Web Wallets

Web wallets like MetaMask are entirely based in a web browser. They are considered to be the least secure and easiest wallets for new users to make costly mistakes with.

Desktop Wallets

A desktop wallet is an application that runs on a desktop or laptop computer. The app will provide the tools to store, receive, and send bitcoin. Electrum is a commonly used desktop wallet.

Hardware Wallets

Hardware wallets allow users to put coins into cold storage while keeping them easily accessible. Hardware wallets each have their own software that allow for the sending and receiving of coins. Alternatively, some hardware wallets might interact with a desktop wallet program.

Paper Wallets

Paper wallets are pieces of paper with both private and public keys printed on them. Coins deposited to a paper wallet are held in offline cold storage until the private keys are imported into another wallet. This can be accomplished either by “sweeping” the QR code with a smartphone app or typing the private key address into a desktop wallet application.

Recommended: What Is A Private Key?

Exchange-Hosted Wallets

Exchange wallets tend to be user-friendly because the crypto exchange handles the hard part. There’s no software to install and a user won’t be holding their own private keys, so there’s less responsibility involved. The drawback is that if the exchange gets hacked or otherwise loses its funds, users could be put in a tough spot.

How Do I Transfer Bitcoin to Another Wallet?

Transferring bitcoin to another wallet works much like sending bitcoin to another user. Simply generate a public key address for the receiving wallet and send coins to it from the sending wallet.

Can You Send Money Using Bitcoin?

In a bitcoin transaction, the coin balance represents monetary value, so in that way, yes you can send money using bitcoin. But using a web, desktop, or hardware wallet to send fiat currency (like US Dollars, Euros, or Yen) isn’t something commonly done—though some multi-currency wallets might have this feature.

Some cryptocurrency exchanges also enable the trading of fiat currencies, so it might theoretically be possible to send fiat currency to another user on that same exchange.

The Bitcoin network alone, however, can’t currently be used to send anything other than bitcoin along with an optional attached text message.

Can I Send Bitcoin to Someone Without a Wallet?

The short answer is no. Using traditional wallets, there’s no way to send bitcoin to someone without a wallet.

However, there are some services available that let people send bitcoin to someone else using alternative methods like an email address. In these cases, the coins are held in a new wallet until they can be claimed by the recipient.

The Takeaway

Sending bitcoin only requires a wallet with some funds and the address (public key) or QR code of the wallet you want to send bitcoin to. The exact details may differ depending on the wallet used to send the transaction, but the sender doesn’t need to be concerned with what type of wallet the receiver is using.

Interested in trading crypto? With SoFi Invest®, members can trade Bitcoin, Ethereum, Cardano, and more—24/7 from the convenience of the mobile app.

Find out how to get started with SoFi Invest.

Photo credit: iStock/happyphoton


SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.

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Source: sofi.com

5/1 ARM Explained: Everything You Need to Know

Mortgage shoppers have multiple options, including the adjustable-rate mortgage (ARM). Is a 5/1 ARM a good choice? A lot depends on how long borrowers plan to keep the property and whether they can cover higher mortgage payments if interest rates go up.

While most borrowers will opt for a conventional 30-year fixed-rate mortgage, some may decide that an adjustable-rate loan is a better fit.

Recommended: Understanding the Different Types of Mortgage Loans

Here’s a closer look at ARMs and the 5/1 ARM in particular.

Anatomy of an ARM

An adjustable-rate mortgage often has a lower initial interest rate—for as little as six months to as long as 10 years—than a comparable fixed-rate mortgage.

Then the rate “resets” up (or, sometimes, down) based on current market rates, with caps dictating how much the rate can change in any adjustment.

With most ARMs, a rate adjustment happens once a year. And ARMs are usually 30-year loans.

Recommended: Adjustable Rate Mortgage (ARM) vs. Fixed Rate Mortgage

What Is a 5/1 ARM?

You’ll see adjustable-rate mortgage loans typically come in the form of a 3/1, 7/1, and 10/1, but the most common is the 5/1 ARM.

With a 5/1 ARM, the interest rate is fixed for the first five years of the loan, and then the rate will adjust once a year—hence the “1.”

Adjustments are based on current market rates for the remainder of the loan.

5/1 ARM Rates

An ARM interest rate is made up of the index and the margin. The index is a measure of interest rates in general. The margin is an extra amount the lender adds, and is usually constant over the life of the loan.

Caps, or limits, on how high (or low) your rate can go will affect your payments.

Let’s say you’re shopping for a 5/1 ARM and you see one with 3/2/5 caps. Here’s how the 3/2/5 breaks down:

•   Initial cap. Limits the amount the interest rate can adjust upward the first time the payment adjusts. In this case, the first adjustment, after five years, can’t be higher than 3%.
•   Cap on subsequent adjustments. In the example, the rate can’t go up more than 2% with each adjustment after the first one.
•   Lifetime cap. The rate can’t go up more than 5% for the life of the loan.

A mortgage payment spike after a rate adjustment can lead to payment shock.

Then again, a 5/1 ARM borrower may be able to save significant cash over the first five years of the loan.

Let’s say a borrower has a choice between a 30-year fixed-rate mortgage loan and a 5/1 ARM. Here’s the difference between the two loans after five years, using hypothetical interest rates, based on a loan amount of $300,000.

The 30-year fixed-rate loan has a rate of 3.8%, a monthly payment of $1,398 (not including taxes, insurance, or closing costs), and a total loan payout of $83,820. The remaining loan balance after five years is $270,456.

A 5/1 ARM has an initial interest rate of 3.0%, a monthly payment of $1,265, and a total loan payout of $75,840. The borrower owes $266,719 after five years.

Over the initial five-year period, the 5/1 ARM borrower would save the following:

Monthly savings = $133.00

Five-year savings = nearly $8,000

Of course, that represents only five years of a typical 30-year mortgage loan.

5/1 ARM Loan Pros and Cons

Borrowers should be aware of all the upsides and downsides of adjustable-rate mortgages.

5/1 ARM Pros

A lower interest rate upfront.
The initial five-year mortgage period usually comes with a lower interest rate than a fixed-rate mortgage. This can be an advantage for new homeowners who lack the cash needed to furnish the home and pay for landscaping and maintenance. And first-time homebuyers may gravitate toward an ARM because lower rates increase their buying power.

Potential for long-term benefit. If interest rates dip or remain steady, an ARM could be less expensive over a long period than a fixed-rate mortgage.

Could be good for short-term homeowners. Some buyers may only need a home for five years or less (for example, business professionals who think they’ll move or be transferred). These borrowers may get the best of both worlds with a 5/1 ARM: lower interest rates and no risk of much higher rates later on, as they’ll likely sell the home and move before the interest rate adjustment period kicks in.

5/1 ARM Cons

Risk of higher long-term interest rates. The good fortune with a 5/1 ARM runs out after five years, when the likelihood of higher interest rates increases. The loan could eventually reset to a rate leading to loan payments the borrower finds uncomfortable or unaffordable.

Higher overall home loan costs. As interest rates rise with a 5/1 ARM, homeowners will likely pay more over the entire loan than they would have with a fixed-rate home loan.

Refinancing fees. You can refinance an ARM to a fixed-rate loan, but you can also expect to pay some significant fees. Typically, mortgage loan refinancing costs 3% to 6% of the total cost of the loan.

Possible prepayment penalty. Some ARMs require special fees or penalties if you refinance or pay off the ARM early (usually within the first three to five years of the loan). And some loans have prepayment penalties even if you make only a partial prepayment.

Possible negative amortization. Some loans have payment caps. Payment caps limit the amount of payment increases, so payments may not cover all the interest due on your loan. The unpaid interest is added to your debt, and interest may be charged on that amount. You might owe the lender more later in the loan term than you did at the start. Be sure you know whether the ARM you are considering can have negative amortization, the Federal Reserve advises.

Recommended: How To Avoid Paying a Prepayment Penalty

Is a 5/1 ARM Right for You?

Is a 5/1 ARM loan a good idea? It depends on your finances and goals.

In general, adjustable-rate mortgages make more sense when there’s a sizable interest rate gap between ARMs and fixed-rate mortgages. If you can get a great deal on a fixed-rate mortgage, an adjustable-rate mortgage may not be as attractive.

If you plan on being in the home for a long time, then one fixed, reliable interest rate for the life of the loan may be the smarter move.

As the Fed says, an ARM presents a trade-off: You get a lower initial rate in exchange for assuming more risk over the long run. The advantages must be weighed along with the risk that an increase in interest rates will lead to higher monthly payments in the future.

Your best bet on ARMs? More tips from the Fed:

•   Talk to a trusted financial advisor or housing counselor.
•   Get information in writing about each ARM program of interest before you have paid a nonrefundable fee. •  Ask the lender or broker about anything you don’t understand, such as index rates, margins, caps, and negative amortization.
•  If you apply for a loan, you will get more information, including the annual percentage rate (APR) and a payment schedule, and whether the loan has a prepayment penalty. The APR takes into account interest, points paid on the loan, any fees paid to the lender, and any mortgage insurance premium. You can compare APRs on similar ARMs and compare terms.
•  Shop around and negotiate for the best deal if you’ve chosen to take out an adjustable-rate mortgage.

The Takeaway

A 5/1 ARM offers borrowers a temporary perk, but they assume risk over the long run. Tempted by a sweet introductory rate? It’s a good idea to go in with eyes wide open about rate adjustments, prepayment penalties, and your homeownership goals.

If one sweet fixed rate from here to eternity—well, up to 30 years—sounds good, SoFi offers fixed-rate home loans as well as mortgages for second homes and investment properties.

There’s never a prepayment penalty. If you’re curious, find your rate in a flash.

Learn more about SoFi home loans today.



SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

SoFi Home Loans
Terms, conditions, and state restrictions apply. SoFi Home Loans are not available in all states. See SoFi.com/eligibility for more information.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Source: sofi.com

Cash-Out Refi 101: How Cash-Out Refinancing Works

A cash-out refinance is one way for homeowners to access a lump-sum of cash. The process involves borrowing a new mortgage for a larger amount than the existing mortgage. The borrower receives the difference in cash. It is only possible to do a cash-out refinance if the borrower has sufficient equity (ownership) in their home. Generally, lenders limit cash-out refinances to 80% of the equity a borrower has built in their home.

The Basics of How Cash-Out Refi Works

Here’s a hypothetical scenario to illustrate how a cash-out refinance could work:

Let’s say you have a home valued at $300,000. You owe $100,000 on your current mortgage and have $200,000 in equity. In this case, you want to borrow $40,000, so you apply for a cash-out refinance for $140,000.

In this scenario, $100,000 of the refinanced mortgage would go toward paying off your existing mortgage along with applicable costs (if any) due at closing, with the remaining $40,000 received in cash.

Upon closing on the cash-out refi, you will have a completely new mortgage and the terms, including the interest rate, term, and monthly payment may all be different than the previous mortgage.

If you’re in need of cash for home repairs or for any other reason, a cash-out refinance is not your only option. Here, we will examine the cash-out refi process, the pros and cons of a cash-out refi, and other options for getting a lump sum loan.

What Is Cash-Out Refinancing Used For?

Technically, a cash-out refinance can be used for just about anything. Some uses for a cash-out refinancing include home renovations, funding a downpayment for a second home, or paying off credit card debt or other high-interest debt.

Ideally, a cash-out refi would result in a lower interest rate than the existing mortgage; however, it’s important to examine your personal financial situation to determine the best outcome for you.

If a lower interest rate is your goal, but you are unable to get it, there are other options that may be worth considering.

Cash-Out Refinancing Eligibility

In addition to having equity in the home, lenders consider a variety of factors to determine eligibility for a cash-out refi. Here are a few examples of what lenders may look at:

Credit score: A higher credit score could help borrowers secure a more competitive interest rate on their cash-out refi.

Loan-to-value (LTV) ratio: This is a percentage reflecting the difference between the outstanding principal balance of the current mortgage versus the current appraised value of your home. Using the example from above, a person with a home with an appraised value of $300,000 and a $150,000 remaining principal balance on their existing mortgage has a 50% loan-to-value ratio. ($150,000 / $300,000 = 50%.)

Appraisal value: Some refinances will require a property valuation—typically a recent appraisal. However, some lenders may find an alternative to a full appraisal, like a virtual valuation, so confirm requirements with the lender.

Seasoning: Seasoning relates to the age of a mortgage. If a mortgage is at least 12 months old, lenders generally consider the mortgage “seasoned.” If a mortgage is not considered fully seasoned, it may not be possible to apply for a cash-out refi.

Pros of Cash-Out Refinancing

Potentially lower rates: Borrowers with a strong, established credit history may be able to refinance to a lower interest rate than they might secure with other types of loans like a home equity line of credit.

Improved credit score: If the money is used to pay off higher-interest debt like credit cards, this could potentially offer a credit score boost.

Mortgage interest deductions: Mortgage interest for cash-out refinance loans may be tax deductible, depending on what the money is used for. Consult with a tax professional for more details as they apply to your unique situation.

Cons of Cash-Out Refinancing

A reduction in equity: Increasing the secured lien on your home reduces the amount of available equity. Downward market fluctuations can further reduce the amount of available equity in your home. These are important considerations when determining the purpose and amount of a cash-out refi.

Length of loan: If the term on the cash-out refi is longer than the remaining term on the current loan, this could extend the overall length of repayment, which could result in increased interest over the life of the loan.

Risk of foreclosure: Anytime someone uses their home as collateral, it’s at an increased risk. In the event there are issues with making payments, the bank could foreclose on the home.

Closing Costs: Borrowers will often have to pay closing costs, anywhere from 3% to 5% of the total loan amount (including the old loan and the amount that is cashed out) , which can add up quickly.

Are There Other Options?

A cash-out refinance isn’t the only option if a homeowner is in need of cash. Here are a few to consider.

Home Equity Line of Credit (HELOC)

A Home Equity Line of Credit (HELOC) is a revolving line of credit that uses the borrower’s house as collateral. Borrowers typically don’t take a lump sum HELOC unless they know they can pay it back. Instead, with a HELOC, the borrower is given a credit limit, and because the credit is revolving, they can use it, pay it back, and then tap into it again. HELOCs typically offer variable rates that could change over the course of the loan.

Home Equity Loan

A home equity loan also uses the borrower’s house as collateral, but offers a lump sum payment. Home equity loans often have a fixed interest rate, and are typically chosen when a borrower knows how much cash they will need up-front. A home equity loan is separate from the mortgage and often offers different terms.

Personal Loan

Personal loans are typically unsecured, which means that they do not require existing assets (like your home) as collateral. This usually means higher interest rates than loans that are secured by collateral.

Making the Right Choice for Your Finances

When determining the right option for you, consider your decision from a few angles. One of the factors in determining the right loan for you is the amount of time it will take to pay back the additional funds needed. No matter what you choose, it’s wise to consider the all-in costs of each possible option.

There are many important factors to consider when taking cash out of your home. Determine what you need the money for, and for how long. Compare the costs to the money potentially saved by refinancing to a lower interest rate. And shop around to find the right option for you.

Cash-Out Refinancing FAQs

Here are some of the most frequently asked questions when it comes to cash-out refinancing.

Are There Limitations on What the Cash Can Be Used For?

With a cash-out refinance, the money can be used for pretty much any purpose. While the money from a cash-out refinance can be used for anything, remember that borrowing a cash-out refinance loan means removing equity and using your home as collateral. So, while you can use the money for anything, some uses are wiser than others.

How Much Can you Cash Out?

Generally, lenders will limit borrowers to 80% of the equity they have in their home. Keep in mind that this may vary based on a lender’s policies. VA loans are an exception to this, they allow borrowers to take out 100% of the equity in their home.

Does a Borrower’s Credit Score Affect How Much They Can Cash Out

A borrower’s credit score may influence how much they are able to borrow. In general, to borrow a cash-out refinance, lenders will expect a minimum credit score in between 600 and 640. Some lenders may offer cash-out refi loans to borrowers with lower credit scores as well. Each lender will have their own requirements around minimum credit scores, so compare options.

The Takeaway

Cash-out refinancing is an option that allows homeowners to tap into the equity in their home. The general process involves borrowing a new mortgage where borrowers can use their existing equity to secure a lump-sum payment.

The money can be used for nearly any expense, from paying off high interest debt to financing a renovation.

Borrowing a cash-out refinance does come with risk, importantly that the borrower is removing equity from their home and the house is used as collateral.

Other alternatives to consider depending on individual financial circumstances include a HELOC, personal loan, or home equity loan.

Curious about SoFi’s competitive cash-out mortgage refinancing rates? Learn more.


SoFi Home Loans
Terms, conditions, and state restrictions apply. SoFi Home Loans are not available in all states. See SoFi.com/eligibility for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’swebsite .
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Source: sofi.com