Refinancing your mortgage requires some upfront legwork and time spent gathering paperwork, but the effort can be worth it if you wind up with a better loan. Most consumers refinance to save money in some way, whether that’s by securing a lower monthly mortgage payment or saving some cash via a lower interest rate. However, there are other circumstances where a mortgage refinance can make sense.
After a divorce, for example, the spouse who gets to keep the family home may need to refinance so the mortgage is in their name only. If you have a ton of equity built up in your home, on the other hand, a cash-out refinance can help you access it.
If you’re in the market for a mortgage refinance, it helps to know which lenders offer the best mortgage products and shopping experience. We compared all the major mortgage refinance lenders available today to find options with low rates and fair terms. Keep reading to see how they stack up.
Best Mortgage Refinance Lenders of 2020
#1: Quicken Loans
Quicken Loans is currently ranked as the nation’s top refinance originator by the Mortgage Bankers Association, which makes for an easy #1 selection.
For refinance, we like Quicken Loans best because of its lightening fast Rocket Mortgage platform. Through this platform a borrower can completely manage the refi process online.
End to end, Quicken Loans has thought through and streamlined the application process. Customers can integrate with their bank which makes verifying account statements a snap. Additionally, customers can add home insurance and property tax information simply by entering their address.
Finally, Quicken Loans has used its tech-savviness to complete 96% of all online closings in the U.S. Anyone worried about a socially-distanced closing should choose Quicken Loans.
AmeriSave is an online mortgage lender that offers new home loans, as well as mortgage, refinance products. This company lets you qualify for lower rates than many brick and mortar banks, and you can even wrap your loan closing costs into your new loan if you agree to a slightly higher APR.
AmeriSave also lets you get a free quote for your new loan online. From there, you can complete the entire loan application process using their website and online portal to upload documents. When it comes to closing on your new loan, they’ll complete the closing anywhere you want — even in your home.
If you’re looking for an online lender that focuses on mortgage refinancing, look no further than loanDepot. This online mortgage lender promises refinance products with lower interest rates and/or lower monthly payments than you have now, and all with a seamless application process you can complete entirely online.
After you refinance with loanDepot once, they’ll also waive all the lender fees the next time you use them to refinance a mortgage.
#4: Bank of America
Bank of America offers popular mortgage refinancing options with a “digital mortgage experience” that makes the process more convenient. You can apply for a refinance online, over the phone, or in-person, and you can choose from a wide range of mortgage products to suit your needs.
Bank of America Preferred Rewards clients can also qualify for a $200 to $600 reduction in their loan’s origination fee. This makes Bank of America an especially lucrative option for consumers who already have a working relationship with them.
#5: Veterans United Home Loans
Veterans United Home Loans is a premier loan company that offers affordable mortgages to veterans and active-duty military who meet “the basic service requirements set by the Department of Veterans Affairs (VA), have a valid Certificate of Eligibility (COE), and satisfy the lender’s credit and income requirements.”
Veterans United can help connect you with the best VA home loans today — often with the lowest rates and fees available today. Veterans United also receive excellent reviews, including a 4.7 out of 5-star rating among existing customers.
While Chase Bank is popular for its popular checking and credit card products, they also offer home loans and mortgage refinancing. Their mortgage refinancing product lets you replace your home loan with a new one that offers better rates and terms.
You can also refinance to take cash out of your home if you have enough equity built up.
Chase promises some of the lowest rates available today, and you can even begin the mortgage refinancing process online.
LowerMyBills.com is another online lending marketplace that lets you compare multiple home loans in one place. This platform lets you enter basic information about your current mortgage, monthly payment, and credit score range to get an idea of the new loan term you could qualify for.
If you decide to move forward and apply, you can enter your information once and get quotes from multiple lenders on the same day. LowerMyBills.com also offers a nifty mortgage refinance tool that lets you see how much you could save with a new home loan.
When Does it Make Sense to Refinance Your Mortgage?
There are many reasons to consider refinancing your home, although the reason you’re considering it may be totally different than someone else. If you’re tinkering with the idea of a mortgage refinance but can’t decide if it will be worth the trouble, it can make sense to play around with a mortgage calculator to see how much you might save each month or over time.
Also, consider the following signs mortgage refinancing could leave you much better off.
Your Credit Score Has Improved
If you had poor credit when you bought your home but your credit score has since improved, there’s a good chance refinancing your home could help you secure a loan with a lower interest rate and better terms. Keep in mind that the best rates and loan terms go to consumers with good credit, which is typically considered any FICO score of 670 or above.
However, some lenders may have higher credit score requirements than that for their top tier loan products.
If your credit score has increased by leaps and bounds since you purchased the home you live in, it’s probably worth checking into a refinance to see how much you could save.
Interest Rates Have Gone Down
Interest rates have gone down considerably over the last ten years, creating an environment where older mortgages are rarely as competitive as they could be. If you’ve had your home loan for five or ten years by now, it’s likely you’ll be able to refinance at a much lower rate. You may even be able to shorten your loan term and secure a lower interest rate in one fell swoop.
You Need to Consolidate Debt
If you have a lot of equity in your home and carry a lot of high-interest debt, refinancing to take cash out can make sense. Keep in mind that the average credit card interest rate is well over 17%, but that you may be able to qualify for a new mortgage with an APR as low as 4.0%.
If you were able to pay off high-interest debt with funds from a cash-out refinance, you could eliminate your credit card debt and save money in interest each month. Just remember that you may need to extend your repayment timeline for this option to work.
You Want to Shorten Your Repayment Timeline
If you initially took out a lengthy home loan but your finances have since changed, it can make sense to refinance into a new loan with a shorter term. A lot of homeowners refinance for this exact reason — usually to switch from a 30-year fixed-rate home loan to a new loan that lasts just 15 years.
Not only can refinancing into a loan with a shorter term help you pay off your home faster, but you can often secure a lower APR in the process. If the difference between your old APR and your new APR is substantial enough, refinancing into a shorter loan may not even change your monthly payment that much.
You Want a Lower Monthly Payment
Another common reason to refinance is securing a lower monthly payment. This can usually be accomplished in one of two ways — either by refinancing to get a lower interest rate or recasting the loan to lengthen your repayment timeline.
There are plenty of reasons to want a lower monthly payment, and that includes improving your monthly cash flow or changing up your loan to accommodate changes to your income.
You Want to Minimize Interest Charges and Save Money
Sometimes you care less about your monthly payment and more about your long-term interest costs. If refinancing can help you secure a lower interest rate that turns into big savings, then it definitely makes sense to switch to a new home loan.
Still, it’s important to remember that refinancing your mortgage is never free. You may get a much lower interest rate, but refinancing comes with closing costs and other expenses that can eat away at your savings. Make sure to run the numbers to see how much you’ll really save before you sign on the dotted line.
You’re Ready to Stop Paying PMI
If you took out a mortgage without putting 20% down, you’re probably stuck paying private mortgage insurance or PMI. This insurance can cost around 1% of your loan amount each year, yet it adds no real value for the homeowner. As a result, most people who are stuck paying PMI try to get out of it as soon as they can.
While PMI is supposed to fall off your mortgage when you have 20% equity according to your mortgage amortization schedule, you may be able to remove PMI before that if your home has increased in value.
You may even be able to have PMI removed right away if you can prove you have 20% equity via a new home appraisal. You can also use this time to refinance into a new loan with a lower rate and better terms.
You Want a Fixed Interest Rate Instead of a Variable Rate
If you took out an adjustable-rate mortgage or another non-traditional loan product when you purchased your current home, it’s possible you’re ready to refinance into a new loan with a fixed term. Where adjustable-rate loans come with rates that move up and down depending on market conditions, fixed-rate home loans come with a low fixed rate that will never change.
You Need to Buy Out Someone Else or Remove a Cosigner
Finally, don’t forget there are many situations where you’ll need to refinance to remove another person from your home loan. This is a common occurrence after a divorce when one spouse decides to keep a home that was once owned jointly, but there are other situations where you may want to refinance to remove a cosigner as well.
Since home lenders won’t simply remove a co-signer from your home loan just because you ask, a formal refinance is typically the only way to accomplish this task.
Is Refinancing Your Mortgage a Good Idea?
Before you move forward with a mortgage refinance, make sure you think through all the pros and cons. Refinancing your home could potentially lead to substantial savings, but you have to consider all the closing costs you’ll pay before you can know for sure.
In addition to deciding if you’re a good candidate for a refinance, you should also take the time to compare at least three lenders to see how they stack up. That way, you’re able to compare several loans to see who offers the best deal for your new home loan and your unique situation.