Refinancing your mortgage with the best mortgage refinance companies can help you save money in the long run. But, refinancing isn't for everyone. In some cases, it can cost you money.
Along with doing the research to see if a refinance will benefit you in the end, it helps to know what the best place to refinance a mortgage is. After taking a close look at the options out there, here are my top picks.
In This Guide
The Best Mortgage Refinance Companies: Our Top Picks
Mortgage refinance lending has changed in recent years as the online lending industry has emerged. These companies compete to deliver a smooth customer experience and competitive loan products. Some are cutting edge tech start-ups with a fresh take on mortgage lending, while others grew out of more traditional banking models.
They all seek to leverage technology in order to streamline the mortgage refinance process. Here is my pick of the top lenders:
- Free Service
- Flexible qualifying process
- Site is easy to navigate
- Funds loans in house
- Registration required to use rate tool
San Francisco-based SoFi is a peer-to-peer lender. The company might be best known for its work with student debt consolidation and consumer loans. It now refinances mortgages as well.
SoFi has their own loan qualification process, that's different from other companies. It takes into account your employment, earning potential and education history.
Your cash flow is more important than your credit score with SoFi. The company is a real maverick, as it doesn't require private mortgage insurance, and doesn't base loan amounts on property appraisals (although they still require an appraisal).
Quicken Loans Review
- Customer service via phone, chat or email
- Variety of loan options available
- High customer satisfaction
- Site not specific to mortgage refinance
Visit the Quicken Loans mortgage refinance page and you'll be greeted with a user-friendly slate of mortgage refinance information and links. The enthusiastic, helpful tone continues as you scroll down a bit to find interest rates and APRs on five different types of mortgage refinance loans.
On the right side of the web page is an interest rate tool based on your finances and credit score. The overall impression is that Quicken Loans wants your business and is knocking themselves out to deliver what you need.
- Wide variety of loan programs
- Flexible options
- Comprehensive customer service
- Doesn't directly finance loans
Sindeo is a startup lender based in San Francisco. It's dedicated to changing how the mortgage industry works and to delivering a streamlined mortgage refinance experience to customers. They offer a transparent, simplified application and underwriting process.
To use their interest rate tool, you provide basic information about your current mortgage and finances. You then get an instant quote on 30 and 15-year fixed-rate loans, as well as adjustable rate and interest-only loans.
Key Considerations When Refinancing Your Mortgage
Once you've figured out if you should and can refinance your mortgage, you are ready to move ahead and take a closer look at lenders. There is a range of options available, from direct mortgage lenders to mortgage comparison sites and even peer to peer lenders. You can look at the different lenders online, getting an overview of what types of loans are available and which ones you qualify for.
Whether the lender offers the loan themselves or generates offers from competing lenders, you'll need to carefully consider the best loan features for you. Do you want a fixed rate loan or an adjustable rate loan? With a fixed rate, your payment remains constant. Your interest rate fluctuates with the market when you have a variable rate loan.
Look at the term of a mortgage refinancing loan as well. A shorter term, such as 15 years, means a higher payment, but big savings on interest over the life of the loan. Some lenders also qualify borrowers for programs such as FHA (Federal Housing Administration) or HARP (Home Affordable Refinance Program) loans. These government sponsored loans allow those with less than ideal credit to qualify for a lower interest rate.
As you shop for the best online deal on a mortgage refinance loan, here are some key points to keep in mind:
1. Compare Interest Rates
Getting the best interest rate is often at the heart of your search for the best mortgage refinance loan. It's worth the time and effort to compare rates from the top online lenders. Some make it easy to see what rates are available by posting current rates right on their homepage.
Many online mortgage refinance lenders have an interest rate tool that, allows you to enter basic loan and financial information to get an idea of the interest rate you'll qualify for. Some interest rate tools give you your likely rate immediately. Others require you to turn over a phone number or email, then the mortgage banker contacts you later to discuss rates.
The truth is that even the best mortgage refinance company can't give you an accurate rate quote until they know the details of your loan, your credit history, and financial situation. But an instant interest rate tool is a great way to help you narrow down the field of potential lenders. When comparing rates, be aware that low-interest rates may be tied to lender points and fees.
2. Check Out the Fees
You'll rarely see a loan application fee from an online mortgage refinance lender, but keep an eye out for them just the same. The best online mortgage lending sites are transparent about their fees, and clearly, display all loan origination fees and closing costs.
An appraisal to determine the real value of your home is often part of the refinancing process. You can typically expect to pay for an appraisal of the property when you refinance a mortgage.
Some online lenders collect a fee upfront to lock in an interest rate or pay for a property appraisal. Such fees should be credited against your closing costs, be sure to confirm that rate lock or appraisal fees are credited against closing costs before paying them. By law, mortgage lenders are required to provide you a "good faith estimate" of all charges.
3. Guidance from a Mortgage Specialist
Some online mortgage refinance services are automated, relying on technology to communicate and process your loan. With others, you are guided through the entire refinance process by a mortgage banker or mortgage specialist. It's helpful to have access to a mortgage refinance professional with a high level of expertise, especially during the underwriting process, when you may have to produce an array of financial documents.
4. Customer Service Options and Access
Look into the customer service options of each online lender. Do they offer phone, email and live chat options? Are you able to meet a mortgage refinance specialist in person? What are their customer service hours? Try contacting each mortgage refinance company you are seriously considering to gauge their expertise and responsiveness. This may result in some aggressive follow-up sales calls, but you will find out which companies are attentive to their customers.
5. Independent Consumer Reviews
While it's easy to find positive customer reviews at a mortgage lending site, the truth comes out with a survey of independent consumer reviews. Check leading review sites such as the Better Business Bureau (BBB) or Yelp for feedback from customers. Don't put too much stock in reviews that condemn a lender, or rave about them. The overall consensus of customers guides you as to what to expect.
6. Website User Experience
Look for an online mortgage refinance site that is easy to navigate and understand. You shouldn't feel confused trying to navigate a lender's site.
There should be a section of the site dedicated to mortgage refinance. A good site will offer an interest rate tool, information on a variety of loan programs, a clear explanation of the application, underwriting, and closing process, and transparent information about rates and fees. It should also make it easy to start a loan application from the site. The best sites will offer easy options to contact the lender via phone, email or chat.
7. Does the website offer educational information?
The best mortgage refinance companies offer educational resources on the mortgage refinance process, strategies, and pricing. Some have a whole section of the site dedicated to articles covering all aspects of mortgage refinance.
Compare Mortgage Refinance Rates
Should I Refinance My Mortgage?
Before you find the best place to refinance your mortgage, it's important to answer the question "should I refinance my mortgage?" There are usually three main reasons people decide to refinance their home loans. If getting a new mortgage won't help you in any of these three areas, it's most likely not the best choice for you.
1. Get a Lower Interest Rate
Although mortgage interest rates did jump up in 2016 for the first time in years, according to Bankrate, they are still lower than they have been in many years. Depending on when you first took out your mortgage, the rates available to you today might be considerably lower than what you are currently paying.
If you have an adjustable rate mortgage, you might wish to refinance to a fixed rate to lock in a lower interest payment. Adjustable rate mortgages usually have a lower rate to start with, but that rate is likely to jump up, raising the cost of your mortgage considerably. With a fixed interest rate loan, you have the assurance that you'll pay the same rate throughout the life of the mortgage unless you refinance.
2. Get a Lower Monthly Payment
For some people, getting a lower monthly payment on their mortgage is reason enough to refinance. If you are struggling to make ends meet or just want more wiggle room in your budget, changing the term of your mortgage with a refinance can make sense.
Usually, when you pick out a 30-year mortgage, you end up with a slightly higher interest rate than if you were to pick a 15-year mortgage. But the amount you pay each month is considerably lower with a 30-year loan, which can make the higher interest worth it to some people.
3. Get Some Cash
Sometimes, people decide to do a cash-out refinance. With a cash-out refinance, you take out a new mortgage for more than you currently owe on your home. The extra cash may be used to pay off other debt, such as student loans, or for an investment or business start-up.
According to statistics from Freddie Mac, 41% of refinances led to a higher loan amount in the second quarter of 2016, while just 3% led to a lower loan amount.
While a cash-out refinance has immediate benefits, it has the big drawback of increasing your debt. You might reduce the interest you pay per month or get a lower monthly payment if you extend the term (number of years) of your loan. But you're also borrowing more money, which can put you at a higher risk for default.
Whether you want a lower interest rate, lower monthly payment or just need a bit of cash, you want to make sure refinancing is really the right option for you. Remember those closing costs you paid when you got your first mortgage?
You'll need to pay them again when you refinance, which can influence whether you're getting the best refinance rates or not. To see if you're actually going to benefit from refinancing your loan, you can use a mortgage refinance calculator, such as this one from Bankrate, to compare the cost of the loan with your savings.
If the closing costs are more than you end up saving, refinancing is most likely not worth it. It could also be that you'll only save money by refinancing if you stay in the home for a certain number of years. If you plan on moving soon, taking out a new mortgage might cost you more money than you save.
Can I Refinance My Mortgage?
Of course for some people, it does not matter of should I refinance my mortgage, but can I refinance my mortgage?
Several factors influence whether or not the best mortgage refinance company will even consider you for a loan. Those factors include:
- The Loan to Value Ratio. The loan to value ratio is the difference between the amount you are borrowing and the value of your home. Usually, a lender won't let you borrow more than your home is worth. Typically, your loan needs to be 80% or less than the value of your home. So if your home is worth $100,000, you'd need to refinance for $80,000 or less with a private lender.
- Your Credit Score. Just as you needed to have excellent credit to take out your original mortgage, you need to have fantastic credit to qualify for a refinance, for the most part.
- Your Income. The best mortgage refinance companies want proof that you'll be able to repay your loan, so they'll want proof that your income is high enough. Usually, your debt shouldn't be more than 38% of your total income. Along with having enough income, the LA Times notes that it's important to have a steady and consistent source of income before you refinance.
How Do I Refinance My Mortgage?
Refinancing your mortgage is very similar to taking one out in the first place. So, if you already have a home loan, you are somewhat familiar with how to refinance a mortgage.
First, it's important to understand what you are getting into when you refinance. Understanding mortgage refinance rates is just part of the process. You also want to understand what the new home loan involves. If you're taking a cash-out refinance and borrowing more than before, you are sure that you can afford the higher monthly payment or increased debt?
Shop around before you commit to any one mortgage refinancing company. I've put together this review to make the process easier for you. It's also worth checking out any companies you're considering working within the National Mortgage Licensing System (NMLS).
You can use the NMLS to see how many complaints are lodged against a lender (if any). For your peace of mind and for the sake of your home, it's best to avoid lenders who have a lot of complaints.
Know why you're refinancing. Having a clear goal in mind will help you make sure you're getting a refinancing offer that actually benefits you and that works with your income level and plans for the home.
It can be easy to lose sight of why you're refinancing when you're in middle of the process and lots of numbers and facts are flying by. Keep your eyes on the prize (whether it's a lower rate, cash or a lower monthly payment) and don't be tempted by special deals or offers you don't need or want.
When to Refinance a Mortgage
When is the best time to refinance your mortgage? A general rule of thumb to follow is to seriously consider refinancing when interest rates drop by at least 0.5 of a percentage point, according to the Wall Street Journal.
If you have a jumbo mortgage, you can refinance when rates have only fallen slightly. You can save a considerable amount on a bigger mortgage if rates fall just 0.125 of a percent, according to the WSJ.
You might also want to wait until your home is properly "seasoned," if you've made a number of improvements to it to boost its value. Seasoning means waiting for a period of time, usually about a year, to make sure that the boost in home value after renovations or improvements is sustainable.
There's no hard and fast rule when it comes to the best time to refinance your mortgage. If refinancing today will save you money in the long run, it's probably the best option for you.
Tips & Advice
As you shop for an online mortgage refinance loan, be sure to check out our advice guides to educate yourself on the ins-and-outs of the mortgage refinance process and strategies. These informative pieces are sure to be helpful as you consider a mortgage refinance lender. Here are some examples:
Should you refinance your mortgage to get a better interest rate? A refinance means paying off your current loan with a newly generated loan. It's a mortgage makeover. Think of it as an opportunity to fix what you don't like about your mortgage. But first, make sure it's worth it.
Refinancing your mortgage is a major financial move, and you want to get the right mortgage refinance loan. There are lenders out there looking to deliver a good product at a fair price, and others who are scammers looking to take you to the cleaners. Keep an eye out for the right loan that saves you money.
The mortgage refinancing process can be daunting. There are lots of competing lenders and loan products, along with a range of refinancing strategies. Then there is the prospect of the application, underwriting, and closing process to navigate. Here are the basics laid out for you in clear language, along with tips on common mistakes to avoid.
When shopping for a mortgage refinance, leave no stone unturned in finding the best loan possible. This means getting an outstanding loan for a person with your finances and credit score. Take a close look at what each lender an offer you. Be sure the loan meets your goals, whether it's saving big on interest over the life of the loan, or taking extra money out for an important project.
There is no time like the present to look into refinancing your mortgage, as Freddie Mac (the Federal Home Loan Mortgage Corporation) predicts modest interest rate increases ahead. Take theses lending sites out for a test drive, using their online tools to see who offers the best deal. You'll certainly get a few promotional emails in your inbox as a result, but you may also find a mortgage refinance loan the will save you significant money.
If you're not quite at the refinancing stage yet and are looking to get your first mortgage, check out my review of the best online mortgage lenders to find a reputable company to work with. To learn more about the peer to peer lending model for refinancing or other loans, take a look at my review of the best personal loans.