The Best Mortgage Refinance Companies
Whenever the economy is in a slump, it is often seen as bad all around. However, there are a few silver linings to look for, one of which is that interest rates are likely to be lower. Most mortgage loans are based on either the Fed Funds Rate or the Wall Street Journal Prime Rate. The same is also true for second mortgages and mortgage refinances.
Usually, when the Federal Reserve Chairman lowers the funds’ rate, Wall Street Journal lowers its prime rate. The two rates are calculated differently, and they mean different things, but a mortgage company may offer their refinance rates at “Wall Street Journal Prime Rate + 0.5%”. In today’s current economic climate, refinancing your mortgage can likely shave some percentage points off of your interest rate and save you thousands of dollars in the long run.
The Mortgage Bankers Association projects mortgage rates will stay below 4% for the entirety of 2020. So even if you’re not looking to refinance immediately, it may work in your favor to do so in the next few months rather than wait for 2021.
Why should I refinance my mortgage?
In addition to taking advantage of lower interest rates, there are many other reasons why somebody may refinance their home mortgage.
- Lower Monthly Payments – Depending on how the interest rate and payment terms change, you’re likely looking at a dramatic reduction in monthly payments.
- Debt Consolidation – By taking advantage of the equity in your home, it’s possible to both refinance your mortgage and pay off all or most of your current debt and roll it all into one monthly payment. This is a great way to get out from under high-interest credit cards.
- Other ‘Cash Out’ Reasons – There may be other reasons you want to refinance your mortgage and tape into the equity to take some cash out along the way. This can be for restructuring your debt to renovate your home to improve its value.
What You Need To Know About Mortgage Refinancing
- You could likely extend your mortgage – If you’ve been paying on a 30-year mortgage for 15 years, then you have 15 years left to go. A mortgage may extend back out to 20 or 25 years. This isn’t always the case and is oftentimes based on your debt: income ratio as a longer-term usually means lower monthly payments.
- Refinancing your mortgage costs money – Lenders are allowed to charge fees for basically any step in the process of refinancing your mortgage. And, since lenders exist solely to turn a profit, they’re probably going to charge you those fees.
- Origination / Application fees
- Credit Check fees
- Appraisal Fees
- Title Company fees
- Attorney fees (if $250k or more)
- Loan Closing fees
- They may tell you how to spend the cash-out equity – If you’re doing a cash-out refinance to consolidate debt, the lender may want to pay off your creditors directly. Or, in some states like Texas, if you’re getting cash out for home improvements, the bank is required by state law to pay the third-party contractor directly.
Mortgage Refinance: Do Your Research!
Everybody’s situation is different. What may work for one person in Texas with a 720 credit score and a $180,000 house likely won’t work for someone in Connecticut that has a 685 credit score and a $385,000 house. It would be best if you did your own research, educate yourself as much as possible, and make sure you’re not too timid to speak up and ask your lender or loan officer questions.
When looking for a company to refinance your mortgage through, there are countless options. You must spend the time to find one that meets your specific needs. Start by checking your credit score, which can be done for free from a website like annualcreditreport.com. From there, shop around for the best refinancing options available, take time to negotiate for the lowest lender fees, and consider which lender matches your situation specifically. Once you have figured out your specifics, check out the top mortgage refinance companies below to find the best match.
Please note that the list below is not exhaustive by any means. Additionally, the mortgage refinances companies below are listed in an unbiased, non-specific order. We can’t say one is better than the other without knowing every single person’s specific situation.
- Fairway Independent – With some of the lowest complaint rates on consumer review sites, Fairway is ready to work with anyone that has a 580 credit score or higher.
- USAA – Members of the armed forces and their family members should consider USAA before any other lender. They literally exist to help out those who have served our country (and those with a credit score of 620 or higher!)
- Bank of America – Serving homeowners nationwide, Bank of America has some of the highest customer satisfaction ratings across the board. Their minimum FICO score is 620, and they offer up to 100% maximum loan-to-value ratios. They may have a poor reputation online, but they’re amazing if you have a high debt-to-income ratio.
- Chase Bank – Another company that is known best for its traditional lending is Chase Bank. Chase is one of those ‘love em or hate em’ operations. When they work in your favor, the outcome is usually wonderful. Well, as long as your credit is in the low 600s.
- Guild Mortgage Co. – Mortgage shoppers prefer this company because they offer multiple mortgage options, require a minimum credit score of 620, and their maximum debt-to-income ratio is constant at 50%.
- Quicken Loans – One of the best lenders for customer service, receiving an A+ Better Business Bureau rating, is Quicken Loans and received one of the best satisfaction ratings in the 2018 Primary Mortgage Origination study. Quicken’s maximum debt-to-income ratio is 60%, serving people whose FICO score is a minimum of 580 for an FHA loan. J.D. Power even rated it a 5 out of 5, making it one of the few on our list to gain all 5 stars.
- Rocket Mortgage – Here, their focus is highlighted in their online experience. Owned by Quicken Loans, Rocket Mortgage markets itself as strictly an ‘online only’ company for those who aren’t looking for any face-to-face or phone time with a mortgage lender.
- Loan Depot – This non-bank lender option offers their services with minimum fees along the way. As purely an underwriting service that operates primarily online, they can charge fees much less than other companies.
- Better.com – People with a minimum credit score of 680 tend to use better.com because of its structure focused on all aspects of refinancing.
- American Federal Mortgage Corporation – This company is one of the top services for private and direct lending. Their application process is completed online with a guaranteed answer within 24 hours. American Federal Mortgage Corp. also offers corporate incentive programs which could allow you to get a mortgage at a discounted rate.
- Veterans United Home Loans – For veterans looking to refinance their mortgage, many turn to Veterans United Home Loans for their little to no out-of-pocket costs. If you are borrowing, they even offer rolling closing costs due to the overall loan amount you receive.
- Reali Loans – Whether you are looking for a fixed, variable rate, or even a jumbo $3 million loan, try looking into Reali loans. The average borrower requirements are a 760 credit score and an average loan price approved for $335,000. And, yes, this is for refinancing as well – not just home purchasing.
- SunTrust – People turn to this bank for excellent customer service, lowering their monthly payments, and shorter repayment periods. Applicants must have at least a 620 FICO score for consideration.
- Third Federal Savings and Loans – With an APR of 3.02%, this is one of the best companies for a low 10-year fixed rate for refinancing. They have received high marks in customer satisfaction for over 25 years and offer all possible loan costs and fees bundled into one singular convenience fee.
- Navy Federal – Known best for government or VA home loans, Navy Federal prides its strategy to limit any out-of-pocket costs to nothing for its members. They don’t particularly care about your credit score, as they don’t even list a minimum score required.
- Santander Bank – If you are looking for the best low 30-year fixed APR, then Santander Bank might be one of your best options. The minimum credit score required is 580, and they don’t have an origination or application fee.
- Alliant Credit Union – Alliant bills itself as offering a purely digital experience with refinancing (which is unique for a credit union of any caliber!) They have refinanced options with low – or no – down payments available.
- LenderFi – Yet another mortgage and refinance company that can avoid costly fees by offering an online-only service. They’re also great at helping you consolidate debt with a refinance.
- Guaranteed Rate – At 5,000 employees strong and close to $40billion funded for 2019 alone, Guaranteed Rat is probably the biggest mortgage company you’ve ever heard of. They work with those who do not have funds for down payments and up-front fees.
- Raymond James Bank – Flexibility is their goal, and they have been successful for many years. They prefer taking a client-focused approach to refinancing, which means if you decide to use this company, they will work to offer you a completely customized solution to your specific needs.