Some of the Best Home Mortgage Refinance Options

Mortgage rates are constantly changing. They were at all time lows in 2020. Even though rates have increased in 2021, they could still be cheaper than when you originally signed your loan. That is why it may still benefit you as a homeowner to reconsider your refinancing options. If you are interested in refinancing your mortgage, you can use this article as a guide to get you going in the right direction.

What is a Mortgage Refinance?

A mortgage refinance is when you pay off an existing loan and replace it with another new loan. This is similar to when you refinance your auto loan.

Understanding Different Types of Mortgage Refinancing

Many people may not realize how many refinancing options are available for mortgages. There are numerous refinancing options but there are three common ones. The three most popular refinance loans are:

Rate-and-Term Refinance Loans
Cash-Out Refinance Loans
Cash-In Refinance Loans

Rate-and-Term Refinance Loans

This is probably the most popular refinance option that borrowers get. In this refinance setup, you will take the original mortgage balance and just borrow at updated rates and terms. Ideally with this refinance loan you will get a lower interest rate and can improve your loan terms. People typically improve their loan terms by switching from an adjustable rate mortgage (ARM) to a fixed rate mortgage instead. You could even update your loan repayment terms!

Cash-Out Refinance Loans

Instead of a home equity loan, you could consider a cash-out refinance loan. This loan type provides you the ability to update your interest rate and other terms. However, you will need to increase the balance of the loan. This refinance loan provides you cash during closing which is then added to your total mortgage balance.

Cash-In Refinance Loans

This is the less used refinance loan out of the three on this list. With this type of refinance, the borrower will bring cash to the closing in order to pay down the remainder of your loan balance. This is a great option for interest savings if you have the means to do this. These loans can provide lower mortgage rates, shorter repayment terms, or both!

Is it a Good Time to Refinance?

If you want to find out whether or not it is a good time to refinance, you need to take a look at your current situation and motivation to refinance. Oftentimes, people like to refinance because they want to reap the benefits of improved mortgage rates. These improved rates can help you get a lower monthly payment, better flexibility terms, reduced repayment term conditions, debt consolidation opportunities, and more!

How Much Would You be Able to Save with a Refinance?

There is no predetermined amount that you could save when you refinance your mortgage. You need to consider the current mortgage rates and your motivation for refinancing. If your current mortgage rate is the same as what’s on the market and you just want to shorten your lease term then you could face no savings. However, if the current rates are less than on your mortgage then you could possibly save a lot! There are free tools online that can help you. You can use a free mortgage calculator to see what you may be able to save.

If You Have a Second Mortgage on Your Home, Can You Still Refinance?

Most of the time, if you have a second mortgage it will get paid off with a refinance. That is because the refinance consolidates your mortgages into one mortgage. However, some people don’t want to get rid of their second mortgage. If you are a part of this group of people then you still have options. You could specifically ask your lender just to refinance one loan and not the other. They may be able to work around your wants for free or for a fee.

What is the Minimum Credit Score Required to Refinance?

There is no set minimum credit score that you need in order to qualify. Every lender is different so they will need to disclose what their qualifying minimum score is.

Can You Refinance Your Mortgage if You Owe More Than the Value of Your Property?

It may be surprising to find out that there are refinance options available even if your property is worth less than what you owe. However, not every refinancing lenderwill allow this to be the case. You need to speak with the financial institution you choose when deciding if this is an available option.

Are There Any Costs Associated with Refinancing?

Your lenders vary. That is why they will have different fees associated with their mortgage refinance process. Some fees that you may encounter are credit report fees, escrow fees, notary fees, recording fees, third party fees, an appraisal fee, processing fees, underwriting fees, lender fees, and more. There are plenty of expenses that you could encounter when refinancing your mortgage. Some lenders may charge more fees than others. That is why it is important to compare your options so you can find some of the best mortgage refinance lenders.

What Documentation Do You Need for a Mortgage Refinance?

Exact documentation requirements will vary by lender. However there are general documents that typically come in handy during the refinance process. You will need to be able to verify your financial information. Pay stubs and/or tax documentation like a W-2 can usually do this. You will also likely need some bank statement information to cover a set time frame. A good rule of thumb is to document the past two months. Be sure to bring identification information as well like your driver’s license, birth certificate, etc.

Since this is a mortgage refinance, you will need your original mortgage information. Examples of this documentation would be a homeowners insurance declarations page, mortgage statements, etc.

Can You Refinance Your Mortgage with a Bad Credit Score?

Some lenders don’t just look at your credit score. Instead they look at the quality of your credit and what is actually on your credit report. Even though you may have a less than ideal credit score, you may still have mortgage refinancing opportunities. You can discuss what credit score qualifications will be required with your lending financial institution.

You May Have Heard a Common Misconception About Refinancing, Is It True?

Some homeowners have heard the myth that you should only consider refinancing if mortgage rates are .5% less than your current rate. This myth is similar to the one that plagues down payments. Many people believe in order to buy a home you need a down payment that is worth 20% of the home’s value. This isn’t true! There are plenty of down payment options that may require no down payment, or a reduced down payment. This same principle applies to the refinancing myth that you may have heard. Since there are many reasons that people consider a mortgage refinance, you shouldn’t only look at the mortgage rates. If loan flexibility and loan term is your primary goal for refinancing then the mortgage rates wouldn’t matter. Make sure to have a clear understanding as to why you want a mortgage refinance.

How Long Will a Mortgage Refinance Take?

The amount of time that a mortgage refinance will take varies by individual. However, the refinance process usually takes up to 60 days to complete. Factors like the complexity of the loan, your paperwork submission, and more could impact the time it takes.

Who Has the Best Home Refinance Rates?

In this article, we will go over numerous lending options! This will give you the opportunity to check out popular lenders and decide what would be best for you. Some lenders that offer good mortgage rates with a mortgage refinance are:

Alliant Credit Union
Ally Bank
Bank of America
Better.com
Caliber Home Loans
Carrington Mortgage Services
Chase Bank
CMG Financial
Fairway Independent
Flagstar Bank
Guild Mortgage
NBKC Bank
New American Funding
PennyMac
PNC Bank
PrimeLending
Veterans United Home Loans

You will notice that these lenders aren’t all traditional banks. That is because there are plenty of loan options that are offered by other types of lenders. Credit unions, mortgage companies etc. Your mortgage refinance doesn’t need to be done the traditional way! You can review some of the best mortgage refinance lenders to make an educated decision.

List of Best Mortgage Refinance Lenders:

If you want to do a quick comparison of the best mortgage refinance options, you need to look at some important information. A quick glance of some factors like the minimum credit score required, the minimum down payment required, and the maximum loan amount can give you insight about these lending options. It may also benefit to consider the Better Business Bureau (BBB) rating that the lender received. Once you find a few that you like just based off of the minimum information, you can do more in-depth research about each option.

Alliant Credit Union

This is a great option for people who do not want a down payment. Alliant Credit Union requires a minimum down payment of 0%. You can even have “bad credit”! Their minimum credit score required is only a score of 620. Alliant Credit Union is a non profit financial cooperative. They are available in all 50 states and have a variety of mortgage products. Some mortgage products they offer are jumbo mortgages, traditional mortgages, refinancing loans, home equity lines of credit, and more. The maximum amount that you can receive for a loan is no more than $2.5 million. This is considered one of the best mortgage refinance options because they require a 0% down payment. They also have a Better Business Bureau (BBB rating) of an A+! This can give you some ease of mind when going through the refinance process.

Ally Bank

Ally bank is not a traditional banking institution. Instead, it is an online option! While they offer traditional banking services and products, they are only offered online. They offer a variety of mortgage products like jumbo mortgages, traditional mortgages, and refinancing loans. The minimum credit score required is 620. The maximum loan amount can be for up to $4 million and the down payment must be at least 3%. Just like the other financial institutions on this list, Ally bank has an A+ rating with the BBB. Refinancing can come with many costs. A benefit to choosing Ally bank as your mortgage refinance lender is potentially discounted closing costs if you are already an existing Ally customer.

Bank of America

Many people are familiar with Bank of America. This is a lender that offers a huge variety of mortgage products. Some of these products include traditional mortgages, Federal Housing Administration (FHA) loans, Department of Veteran Affairs (VA) loans, jumbo mortgages, mortgage refinancing options, a home equity line of credit, etc. Bank of America does not disclose the minimum credit score required in order to qualify. However, if you want to avoid a hard inquiry you can ask if they have any pre-approval opportunities available. Pre-approvals use soft inquiries to check your eligibility and do not impact your credit score. The maximum amount that you can receive for a loan is no more than $2.5 million. Your minimum down payment must be at least 3%. They also have a BBB rating of an A+!

Better.com

This is a direct lender that provides mortgage financing online. They provide borrowers a variety of mortgage products. Some of these products include traditional mortgages, jumbo mortgages, government-backed mortgages, refinancing options, and more. Unfortunately, not all 50 states are eligible to use better.com as a lender. Only 43 states and the District of Columbia are eligible. This is a relatively new company that was founded in 2014. The minimum credit score required is 620. The maximum amount that the loan can be worth is not disclosed but you will need at least a 3% down payment. Even though some information is not disclosed they still have an A+ rating with the BBB.

Caliber Home Loans

Many people are not familiar with this Texas lender. However, they offer an array of mortgage products across the country! These mortgage product options are traditional mortgages, refinancing options, FHA loans, the United States Department of Agriculture (USDA) loans, VA loans, and more. The minimum credit score required is 620. The maximum value of your loan amount can be up to $3 million and your down payment must be at least 3%. Unlike a majority of the lender options of this list, this company does not have an A+ rating with the BBB. Instead, they have just an A (which is still a good rating!)

Carrington Mortgage Services

This is a lending option that provides consumers traditional and government backed mortgages. Many homeowners like this lender because of the fact that you can have a terrible credit score and still potentially qualify. The minimum credit score required for this company is just 500. The maximum amount that your loan can be is $2.5 million. You will also be required to provide a minimum down payment of 3%. This is a trusted company, and has an A+ rating from the BBB.

Chase Bank

This is a popular traditional banking option throughout the country. Many people are familiar with Chase Bank. They offer a variety of mortgage options, refinance loans, and more. The minimum credit score required is 620. The maximum amount your loan can be worth is $3 million and this lender requires a 3% down payment. This is such a big company that people tend to forget to look at the BBB rating. However, the rating would be satisfactory because it is an A+!

Citizens Bank

Another popular regional banking option, Citizens bank offers a variety of mortgage products. They provide traditional mortgages, refinancing options, home equity lines of credit, jumbo mortgages, and more. The minimum required down payment would be 3%. Even though both the minimum credit score and maximum loan amount are not disclosed, they still have an A+ rating from the BBB!

CMG Financial

This private mortgage banking firm has been around since 1993. This lender provides a variety of mortgage products from conventional mortgages, government-backed mortgages, jumbo mortgages, all in one loans, home renovation loans, and more. The minimum credit score required to qualify is 620. Your maximum loan amount can be up to $3 million with a minimum down payment of 3%. Similar to a majority of the financial institutions on this list, this lender has an A+ rating with the BBB.

Fairway Independent

This Wisconsin independent mortgage company has been around since 1996. That was over 20 years ago! They operate as not only a mortgage broker but as a direct lender as well. There are plenty of mortgage products that Fairway Independent offers. These products include traditional mortgages, FHA loans, USDA loans, VA loans, jumbo mortgages, home renovation loans, reverse mortgages, refinancing options, and more. This is a great option for people with poor credit becaused the minimum credit score required is 580. The maximum amount of your loan is not disclosed so you will need to discuss options with the financial institution. The minimum down payment required is 3%. They also have a Better Business Bureau (BBB rating) of an A+!

Flagstar Bank

Available in all 50 states, this is a great lending option for consumers. They provide a variety of mortgage products like traditional mortgages, refinancing options, FHA loans, VA loans, USDA loans, and more. The minimum credit score required is not disclosed by the company. However, you can see if they offer pre-approvals in order to determine eligibility without impacting your credit score. This bank also doesn’t disclose the minimum down payment amount required. The maximum loan amount available is $3 million. Even though this company does not disclose some of their information, they still have an A+ rating from the BBB!

Guild Mortgage

This is one of the older lending options on this list! It was founded over 50 years ago in 1960! They provide a variety of traditional and government-backed mortgage products. The minimum credit score required is 620 and the maximum loan amount can be no more than $2 million. Your down payment will have to be a minimum of 3%. The amount of time they have been in business shows that they are able to withstand decades of commerce. The BBB also gave them an A+ rating.

NBKC Bank

This mortgage lender provides opportunities in all 50 states! Based in Kansas, they offer a wide variety of traditional and government-backed mortgage products. The minimum credit score required is 620. However in order to determine the maximum loan amount and down payment required you will need to talk to the financial institution because they do not disclose that information. Even though they don’t disclose all information, they still have an A+ rating from the BBB. Since this is an online banking option, you also have the benefit of convenience.

New American Funding

Similar to a bunch of the lender options on this list, New American Funding only requires a minimum credit score of 620. They also offer a maximum loan amount of $3 million and have an A+ BBB rating! Overall they offer a variety of mortgage products like traditional mortgages, refinancing options, jump mortgages, reverse mortgages, and more.

PennyMac

Don’t confuse this national mortgage lender with Freddie Mac! This is a lender that provides a variety of mortgage products like traditional mortgages, FHA loans, VA loans, refinancing options, and more. These lenders have the lowest maximum loan amount on this list at $765,600. However, the minimum credit score needed is 620 and the minimum down payment required is 3%. Overall, they have an A+ rating from the BBB!

PNC Bank

This is a traditional banking option that may be a great lender for you to consider. This bank offers a majority of the loan types from traditional, government-backed, jumbo, and more. The maximum loan amount can be for up to $5 million and minimum down payment must be 3%. PNC Bank does not disclose the minimum credit score required in order to qualify. If you want to avoid a hard inquiry you can ask if they have any pre-approval opportunities available. Similar to many other lending options on this list, PNC Bank has an A+ rating from the BBB.

PrimeLending

This mortgage lender is based in Dallas and is a great option for consumers. They offer a variety of mortgage products from traditional loans, jumbo loans, refinancing options, and more. This option on this list has one of the higher minimum credit score requirements of 640. The maximum loan amount that you can take out is not disclosed, but you will only need at least a 3% down payment. Even though there is some information that is not disclosed, they still have a BBB A+ rating.

Veterans United Home Loans

Trusted by 300,000 veterans, this is a great mortgage lending option to consider if you have served or are actively serving the military. They are even endorsed by celebrities like Rob Riggle. This is a loan option that specializes in VA loans, VA jumbo loans, and refinancing options. The minimum credit score required is 640. You will only be able to get a loan amount for no more than $1.5 million. This is a great option because it may not require a down payment! You can also feel confident with this lender because they have also received an A+ rating from the BBB.

Which Bank is Best for Refinancing?

The best banking option for refinancing is entirely up to you. You need to look at your credit score, loan amount required, and other eligibility factors when making a decision. The bank that best fits your needs will be the one you should choose. Keep in mind the reason you are looking to refinance when considering your lending options!

Which Lender Has Lowest Mortgage Rates?

In order to determine which lenders have the lowest mortgage rates, you will need to comparison shop. Comparison shopping consists of looking at multiple options for the same product in order to see which is best. You want to find a lender that follows the national average for mortgage rates.

What Are the Current Mortgage Rates? What is the Best Refinance Rate Today?

It wouldn’t hurt to keep up to date with the current mortgage rates available. There are free tools online that can provide you this information so that you stay up to speed! When looking at this information you want to see how it compares to your current mortgage rate. In order to find the best refinance rate today, you should use those free online tools.

How to Choose the Best Mortgage Refinance Lender?

Your lender is a key component to achieving the best mortgage refinance experience. That is why there are multiple factors to keep in mind when choosing the financial institution that you will refinance with. When quickly looking at your options you want to look at the minimum credit score required, maximum amount your loan can be worth, the minimum down payment required, and BBB rating. However, when it is time to pick your final option it can help to consider the mortgage products available, their interest rates, and any customer complaints.

Understanding Mortgage Products

If you are interested in a mortgage refinance, you need to consider the available mortgage products. Not every financial institution will offer the same products. If you choose a lender that does not have a variety of mortgage products to choose from, you may get stuck with an option you don’t like. You want to be sure that your mortgage lender offers refinance products like:

Fixed-rate refinances
Federal Housing Administration (FHA) refinances
Department of Veterans Affairs (VA) refinances
Adjustable-rate mortgage refinances
Jumbo loan refinances

Not all of these will be relevant to you. For example if you are not a veteran or actively in the military, available VA refinancing options will be irrelevant. You want to make sure that the mortgage lender has the product that would be best for your current situation.

Understanding Interest Rates

Now that you know which product you are interested in, you need to consider the price. You may be able to compare mortgage rates across lenders with a pre-approval. Pre-approvals are soft inquiries and do not impact your credit score. These can give you an idea of your qualifications and how they relate to each financial institution’s eligibility criteria.

Even if the rates aren’t different, it is important to compare. The smallest savings could add up over time. When comparing mortgage rates, you need to make sure to look at the Annual Percentage Rate (APR). This rate will provide insight on the actual cost of the loan every year.

Understanding Customer Complaints

It is important to check out the lender’s rating with the BBB. However, there are also other places you can check to go over any customer complaints. The Consumer Financial Protection Bureau is an agency that has free tools available that can provide you information. Their Consumer Complaint Database shows issues that may have plagued the lender in the past.

Also consider the expression “if it ain’t broke, don’t fix it!” If you are pleased with your current mortgage lender, there may be no need to switch. Consider your personal experience with the company when figuring out who you will refinance with.

What Will the Mortgage Refinance Process Look Like?

You can break down the mortgage refinance process in five steps. That may seem like a lot but they are all very manageable!

Step #1: Research Your Options

This is the time to gather information and prepare. You want to make sure you have all of your documentation ready and take the time to look at your lending options. You want to consider all factors before you make a decision of where you want to go.

Step #2: Check Your Prequalification Status

Some lenders offer you the ability to prequalify for a loan. Instead of running a hard inquiry on your credit, they pull a soft inquiry check instead. When they choose to pull a soft inquiry, you do not see an impact on your score. This type of inquiry also doesn’t require an approval from the consumer to be run. You will be able to get a rough idea of what the numbers are associated with your refinance.

Step #3: Submit Your Application

You did the research and found a lender you liked. You reviewed your eligibility with a prequalification and were pleased with the numbers. Now, it is time for the real thing! You can submit your application with the lender. Make sure to have the documentation that you prepared.

Be ready for any follow-up questions from the lender. For example if you had an employment gap on your record. You may need to explain the circumstances around that time frame to the lender.

Step #4: See if You Need a Home Appraisal

A majority of the time, the lender will need a home appraisal. They will usually be able to help you with this process. You will need to set up an appointment with a home appraiser. From there, the home appraiser will come to your home and take pictures and measurements. You can expect this to be an upfront cost.

Step #5: Set a Time for Closing

While your lender takes care of their responsibilities like underwriting, paperwork, etc., you can schedule closing. This can only be done if your home appraisal was determined as satisfactory. Before closing, you should expect to receive some paperwork. Your closing disclosure should be given to you before the scheduled closing. At closing you will need to fill out multiple forms of documentation. Make sure you understand what you are signing and get the help of a professional if you need.