3 Best Mortgage Refinance Companies

3 Best Mortgage Refinance Companies

You don’t have to use the same lender when you refinance your mortgage. In fact, shopping around could result in a lower rate and more affordable loan.

You don’t have to refinance with your existing mortgage lender. In fact, switching could actually save you money — that’s why it’s important to shop around and compare things like rates, fees, and service.

Comparison shopping is especially important during the COVID pandemic, when lenders have seen unprecedented levels of refinancing activity and may be backlogged with other borrowers.

With Credible, you can compare rates from the best refinance companies in the country. Our four partner lenders below can help get you a competitive rate on your next mortgage refinance.

Let’s take a look at Credible’s partner lenders:

1. Rocket Mortgage
2. Caliber Home Loans
3. LoanDepot

If you’re planning to refinance your VA loan, then online lender LoanDepot might be a great choice. The company was one of the top 10 VA lenders in the country last year and even has dedicated VA specialists on staff.

Pros

• Experienced VA lender
• VA specialists on staff
• Loyalty perks available for future refinances

Cons

• Must contact lender for rates and terms
• No HELOCs, home equity loans, or USDA loans

Read Credible’s full review of LoanDepot for more details.

Keep reading: 7-1 ARM: Your Guide to 7-Year Adjustable-Rate Mortgages

Other mortgage refinance companies to consider

While we certainly recommend the above refinance lenders, they’re not your only options. For additional lenders to consider, see below.

Please note that because the following are not Credible partner lenders, you will not be able to compare personalized rates and apply for a loan from them through our platform

How does mortgage refinancing work?

Refinancing is when you take out a new mortgage loan and then use that loan to pay off and replace your current mortgage. There are two types of refinances you can choose from:

1. Rate-and-term: A rate-and-term refinance is a traditional refinance. It replaces your old loan with a new one that has a different term and interest rate. It’s usually a good choice if you’re looking to lower your monthly payment.
2. Cash-out: A cash-out refinance allows you to turn your home equity into cash. You replace your old loan with a higher-balance one, and then receive the difference in cash.

Learn More: How to Refinance Your Mortgage in 6 Easy Steps

What are the benefits of refinancing?

The biggest benefit of refinancing is that it can lower your interest costs and reduce your monthly payments. Accessing cash or switching loan types can be good reasons to refinance, too.

Let’s look at these benefits in more depth:

• Lowering your interest rate: Most homeowners refinance to take advantage of low interest rates. If market rates drop below the rate on your current loan, refinancing could mean paying less per month and in the long run.
• Reducing your monthly payment: Refinancing into a loan with a lower interest rate is one way to lower your monthly mortgage payments. You can also replace your old loan with a longer-term one — for example, by refinancing from a 15-year to a 30-year mortgage. This spreads the balance out further and reduces your payment even more.
• Tapping your home equity: With cash-out refinancing, you can tap your home equity to use toward home improvements, sudden medical bills, tuition, or other expenses you have on your plate.
• Changing your loan type: If you have an adjustable-rate loan (meaning the interest rate can change periodically), then you may want to refinance into a fixed-rate mortgage. This would give you a consistent rate and payment.

How do I qualify for refinancing?

The exact requirements you’ll need to meet vary by lender and loan program, but generally, you’ll need at least the following to qualify for a refinance:

• Minimum credit score: 600 to 620
• Debt-to-income ratio: 43% or lower
• Home equity: 20% or more

In March 2021, the majority (nearly 89%) of refinance borrowers had a credit score of 700 or higher. You may be able to get a refinance loan with bad credit, but you’ll need to be stellar in other areas.

Check Out: Credit Score Needed to Refinance Your Home

How much does it cost to refinance?

Refinancing does come with closing costs. According to 2020 averages, the typical homeowner pays just under $3,400 total to refinance their mortgage, though it varies by state.

Some lenders offer what are called no-closing-cost mortgages. These allow you to finance your closing costs — or roll them into your loan balance — and pay them off over time.

Does it make sense to refinance now?

The best time to refinance is when rates drop lower than what’s on your current loan, you need an infusion of cash, or when you’re nearing a potential rate increase on your adjustable-rate mortgage. Keep in mind you’ll also need savings on hand to cover the closing costs.

How do I choose the best mortgage refinancing lender?

Shopping around for your refinancing lender is critical, and according to Freddie Mac, comparing just five different companies can save you as much as $3,000.

When comparing your options, be sure to look at:

• Interest rate and APR
• Loan term
• Points and origination fees
• Total closing costs
• Ratings and reviews from past customers

To get a great refinance rate, consider using Credible. You can compare several refinancing rates from our partner lenders all at once — checking rates is free and won’t affect your credit score.