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Best Mortgage Refinance Options

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Refinancing might be right for you if you want to pay off debt, take advantage of lower interest rates or give yourself a more manageable monthly mortgage payment. We’ll help you take a look at some of the best refinance mortgage companies to help you get the lowest rates and what you’ll need to qualify. 

Best Mortgage Refinance Options:

Best Mortgage Lenders for Refinancing

So many companies offer refinance options, so how can you choose which one is right for you? Let’s take a look at some of the best refinance mortgage companies you can use to adjust your loan terms or take cash out of your home. 

Avg. Days to Close Loan
30
Minimum Credit Score
580

1. Rocket Mortgage®®: Best for Simple Refinancing

Rocket Mortgage®®, one of the largest mortgage companies in the United States, is a great choice to learn more about the refinancing process. Rocket Mortgage®® has taken steps to simplify the refinancing process. You can apply for a refinance from your phone in as little as 30 minutes.

Just open its online refinance application, answer a few questions about your current loan status and receive rates and options instantly. If you’re new to the refinance process and want to adjust your loan with as little effort as possible, be sure to consider Rocket Mortgage®®.

Rocket Mortgage®® offers a wide range of refinancing solutions to fit your needs. From jumbo to USDA loan refinancing, its team can service almost every type of loan. 

Avg. Days to Close Loan
21
Minimum Credit Score
620

2. better.com: Best for Low-Interest Refinancing

Refinancing to a lower interest rate can save you thousands of dollars by the time you pay off your loan. But how can you be sure you’re getting the lowest interest rate possible? You can individually collect quotes from dozens of lenders in your area — or can work with better.com.

A completely online mortgage company, better.com has streamlined the refinancing process and cut out the middleman to offer you some of the lowest rates possible. If you do manage to find a more affordable refinance rate from a competitor, better.com will beat it, thanks to its Better Price Guarantee.

better.com currently offers FHA and conventional loan refinancing.

Avg. Days to Close Loan
45
Minimum Credit Score
620

3. Bank of America: Best for High DTI Ratios

One of the first things that lenders look at when they consider you for a refinance is your debt-to-income (DTI) ratio. Your DTI ratio is the percentage of your income that goes toward recurring expenses like whittling away credit card debt and making mortgage payments.

The higher your DTI ratio, the riskier you are as a refinance candidate. If you have more debt, you may want to consider refinancing with Bank of America. Bank of America has lower debt standards, which means you can refinance even if you owe more money in student loans or credit card debt. Bank of America currently offers FHA, VA and conventional loan refinancing. 

Avg. Days to Close Loan
21
Minimum Credit Score
620

4. Chase: Best for In-Person Service

Online mortgage solutions can be quick and convenient. However, in a world full of malfunctioning technology, it can be comforting to know that you have in-person options to get assistance.

Chase is one of the largest banks in the United States, with over 5,000 branches across the country. It combines a unique in-person and online approach to refinances that saves you time and stress. You can begin your application online or in-person at one of its branches. If you ever need assistance, you can contact a Chase representative and receive in-person help at your local branch.

Chase offers FHA loans, VA loans, conventional mortgages and jumbo loans. As of today, its average 30-year fixed refinance rate is 3.466% APR.

Refinance Requirements

You’ll see plenty of lenders that offer refinance options when you shop but it’s important to remember that not everyone will qualify for a refinance. Let’s take a look at what you’ll usually need before you can refinance a mortgage. 

How Much Can You Refinance?

Most lenders won’t allow you to refinance 100% of your home value, whether you’re taking a rate or term refinance or you’re taking cash out. The limit for refinancing is usually between 80% and 90% of your loan’s principal balance. For example, if you bought a home with a $200,000 loan, your lender might not allow you to refinance more than $180,000 of your balance.  

This means that you’ll usually need to make payments on your loan for at least a few years before you can refinance. When you initially start paying down your loan, most of your monthly payment goes towards interest. This means that you might actually have a lower percentage of equity in your home than you expect — especially if you’re still early in your loan term.

Let’s take a look at an example. Imagine that you borrow $200,000 in a loan at 4% interest with a term of 30 years and no down payment. In the first year of your loan, you’ll pay about $11,458 to your mortgage company in the form of monthly payments. However, only about $3,531.90 of that will go toward paying down your principal balance, with the rest paying off accumulated interest. In this example, you only have about 1.76% equity in your home after a year of mortgage payments. This will make it very difficult for you to find a mortgage company that will offer you a refinance.

If you aren’t sure how much equity you have in your home, contact your mortgage lender and request a statement. 

Do You Meet Your Lender’s Standards?

In addition to equity standards, you’ll need to meet your lender’s individual standards before you can qualify for a refinance. Some factors that your lender will consider when you apply for a refinance include:

  • Your credit score is a 3-digit number that represents how likely you are to pay back the money you borrow. The higher your credit score, the more responsible you are as a borrower. Most mortgage companies require that you have a credit score of at least 620 points before you can refinance with a conventional loan.
  • Your debt-to-income (DTI) ratio is a percentage that represents the amount of your pretax income that goes toward recurring expenses. You can calculate your DTI ratio by adding up all of your set monthly expenses (mortgage payment, minimum credit card payment, minimum student loan payment, etc.) and dividing it by your monthly pretax income. If your DTI ratio is higher than 50%, you may have trouble qualifying for a refinance.
  • Your income and assets will also be evaluated. Your lender needs to know that you have the means to pay back the money they give you in a refinance. You’ll usually need to provide income and asset documentation when you apply for a refinance with a new lender.
  • Your appraisal results will also be evaluated. Mortgage lenders can’t loan out more money than your home is worth. Most lenders will require you to get a new appraisal before you qualify to refinance — especially if you’re taking cash out of your equity.

In order to verify that you qualify for a loan, your lender will usually ask you for the following documentation:

  • Your last 2 W-2s
  • Your last 2 bank statements
  • Your last 2 paystubs

If you’re self-employed, you might need to provide additional documentation. 

Can You Cover Closing Costs?

You’ll need to pay closing costs when you refinance your loan, just like when you originally bought your home.  As a general rule, you can expect to pay between 2% and 3% of your current loan value when you refinance.

If you can’t pay your closing costs upfront, your lender might allow you to roll your closing costs into the balance of your loan. However, this usually requires you to accept a higher interest rate. 

Refinance Rates

Mortgage refinance rates change on a daily basis. Factors like the current housing supply, the overall state of the economy and even current government bond interest rates can influence what you’ll pay when you apply to refinance. Let’s take a look at some of the best places to refinance a mortgage in terms of today’s interest rates.  

Mortgage LenderCurrent Refinance Rate
Rocket Mortgage®3.886% APR
Bank of America3.642% APR
better.com3.527% APR
SunTrust3.631% APR
Chase3.466% APR

*rates as of 2/12/20

Closing on Your New Loan

The best mortgage company for you will depend on your specific needs as a homeowner. Before you consider refinancing companies, be sure you understand the current state of your finances and your loan balance. Check your credit score, research current average mortgage interest rates and request a mortgage statement from your current lender before you start shopping for a new loan. This will help you ensure that you’re getting the lowest rates and best terms possible when you do apply for a refinance. 

Frequently Asked Questions

1) Q: How do I get pre-approved?

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1) Q: How do I get pre-approved?
asked
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First, you need to fill out an application and submit it to the lender of your choice. For the application you need 2 previous years of tax returns including your W-2’s, your pay stub for past month, 2 months worth of bank statements and the lender will run your credit report. Once the application is submitted and processed it takes anywhere from 2-7 days to be approved or denied. Check out our top lenders and lock in your rate today!

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2) Q: How much interest will I pay?

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2) Q: How much interest will I pay?
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Interest that you’ll pay is based on the interest rate that you received at the time of loan origination, how much you borrowed and the term of the loan. If you borrow $208,800 at 3.62% then over the course of a 30-year loan you will pay $133,793.14 in interest, assuming you make the monthly payment of $951.65. For a purchase mortgage rate get a quote here. If you are looking to refinance you can get started quickly here.

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3) Q: How much should I save for a down payment?

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3) Q: How much should I save for a down payment?
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Most lenders will recommend that you save at least 20% of the cost of the home for a down payment. It is wise to save at least 20% because the more you put down, the lower your monthly payment will be and ultimately you will save on interest costs as well. In the event that you are unable to save 20% there are several home buyer programs and assistance, especially for first time buyers. Check out the lenders that specialize in making the home buying experience a breeze.

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Disclaimers:

Quicken Loans® received the highest score in the J.D. Power 2010 – 2019 (tied in 2017) Primary Mortgage Origination and 2014 – 2019 Primary Mortgage Servicer Studies of customers’ satisfaction with their mortgage sales experience and mortgage servicer company, respectively. Visit jdpower.com/awards.

The payment on a $200,000 15-year fixed-rate loan at 3.125% and 75% loan-to-value ratio (LTV) is $1,393.22 with 2.125 points due at closing. The annual percentage rate (APR) is 3.565%. Payment does not include taxes and insurance premiums. The actual payment amount will be greater.​ Rates shown valid on publication date of February 11, 2020. Some state and county maximum loan amount restrictions may apply.​ 

The payment on a $200,000 30-year fixed-rate loan at 3.75% and 75% loan-to-value ratio (LTV) is $926.24 with 1/75 points due at closing. The annual percentage rate (APR) is 3.968%. Payment does not include taxes and insurance premiums. The actual payment amount will be greater.​ Rates shown valid on publication date of February 11, 2020. Some state and county maximum loan amount restrictions may apply.​ 

Interest rates/APR/Fees current as of February 7, 2020.

1Based on Quicken Loans® data in comparison to public data records.