Refinancing gives you the opportunity to lower your rate or shorten the lifespan of your mortgage, allowing you to save on interest and repay the loan faster. Regardless of why you want to refinance, it’s important to shop around for lenders that offer the best terms and customer support.
- Flagstar Bank
- PNC Bank
- Chase
- Better.com
- Ally
- Guaranteed Rate
- PenFed Credit Union
- Bank Of America
- Navy Federal Credit Union
- New American Funding
- Northpointe Bank
- Rocket Mortgage
- SoFi
- Truist
- LowRates.com
- Summary: Best Mortgage Refinance Lenders of 2024
- Complete Guide To Refinancing a Mortgage
- Recap: Best Mortgage Refinance Lenders Of 2024
- Methodology
Best Mortgage Refinance Lenders 2024
- Flagstar Bank: Best for Online Closing Process
- PNC Bank: Best for Medical Professionals
- Chase: Best for Relationship Discounts
- Better.com: Best for Online Mortgages
- Ally: Best for Fast Preapproval
- Guaranteed Rate: Best for Expanded Availability
- PenFed Credit Union: Best for Saving Money On Fees
- Bank Of America: Best for Existing Customers
- Navy Federal Credit Union: Best for Rate-Match Guarantee
- New American Funding: Best for Low Minimum Credit Scores
- Northpointe Bank: Best for Borrowers With Adverse Credit
- Rocket Mortgage: Best for Flexible Mortgage Terms
- SoFi: Best for a Seamless Application Process
- Truist: Best for Applying Online
- LowRates.com: Best for 24-Hour Service
Summary: Best Mortgage Refinance Lenders of 2024
Tips for Comparing Best Mortgage Lenders for Refinancing
If you’re considering refinancing to lower your mortgage rate, then you’ll want to compare interest rates and fees by lender. Many lenders don’t disclose fees or even rates online, so you might have to contact them and ask for these items directly.
To get an even more accurate description of how much the loan will cost you, you can apply for multiple loans and receive loan estimates based on your credit score, loan-to-value (LTV) ratio, debt-to-income (DTI) ratio and other financial details.
It’s always a good idea to get multiple loan estimates when you’re trying to capture the lowest rate available. You can use the best estimate to negotiate with other lenders, which might result in getting a lower rate or reducing certain administrative fees.
When you’re shopping around, be sure to ask about any discounts—including appraisal waivers—that might be available to you. Some financial institutions offer discounts to existing customers; you might also find military discounts.
Complete Guide To Refinancing a Mortgage
- What Are Current Mortgage Refinance Rates?
- What Is Mortgage Refinancing?
- How Does Refinancing a Mortgage Work?
- How Much Does It Cost To Refinance a Mortgage?
- Pros and Cons of Refinancing
- When To Refinance Your Mortgage
- How To Refinance Your Mortgage
- Mortgage Refinancing Requirements
- How To Choose the Best Mortgage Refinance Company
- How Often Can You Refinance?
- Alternatives to Mortgage Refinancing
- Recap: Best Mortgage Refinance Lenders Of 2024
What Are Current Mortgage Refinance Rates?
Published rates aren’t guaranteed. The specific rate you’re offered can depend on factors such as your credit score, the mortgage term and whether you’re cashing out equity at closing.
What Is Mortgage Refinancing?
When you refinance a mortgage, you’re essentially taking out a new mortgage to replace your existing loan. At closing, you’ll pay off your old loan and receive a new payment amount and payoff date.
Recently, homeowners often refinanced mortgages to take advantage of lower rates. Today, with mortgage rates at the highest level in decades, people are more likely to refinance their home loan to reduce their monthly payments or to cash out a portion of their equity.
How Does Refinancing a Mortgage Work?
Refinancing your mortgage means you’re taking out a larger home loan, usually at a lower interest rate or shorter term—or both—to pay off your existing loan.
You can also do a cash-out refinance, which allows you to access the equity you’ve built up in your home. The cash-out refinancing process is similar to traditional refinancing; the only difference is that you’ll replace your current loan with a larger one and receive the difference—your equity—as a lump sum cash payment. You usually need at least 20% equity in your home to be eligible.
How Much Does It Cost To Refinance a Mortgage?
Refinancing closing costs can run anywhere from 2% to 5% of the loan amount. There are no-closing-cost refinance options, but they generally involve rolling closing costs into the principal balance, which will likely cost more in the long run. The bottom line is that refinancing can be very financially advantageous—but it’s rarely free.
Pros and Cons of Refinancing
Pros
- Lower your monthly payments and save on interest
- Eliminates high mortgage insurance premiums on FHA loans
- Allows you tap into your home equity
Cons
- Comes with closing costs (usually 2% and 6% of the total loan amount)
- Keeps you in debt longer
- More interest accrues over the lifespan of the loan
When To Refinance Your Mortgage
You should consider refinancing your mortgage if at least one of the following criteria is true:
- It allows you to lower your monthly mortgage payment by increasing the length of your loan term.
- You’ll receive a a lower interest than what you currently have and reduce your costs over the long term.
- You can refinance into a shorter term to pay off your house faster, though monthly costs will be higher.
- You can get rid of mortgage insurance with the help of a refinance.
How To Refinance Your Mortgage
Before jumping into anything, crunch the numbers and use our refinance calculator to make sure refinancing is the right financial choice for you. After that, learn more about how to refinance your mortgage, including the key steps in the process.
Always shop around for a lender, too, even if you want to start by contacting the one who has your current mortgage. Look at three to five lenders before making a final decision. Next, gather the required documents and apply. You may also consider locking in your interest rate.
Mortgage Refinancing Requirements
The mortgage refinance application process is similar to the purchase process. You’ll need many of the same documents to verify your credit and finances, and most refinance programs require a new appraisal as well. Here’s a closer look at some of the core requirements.
Credit Score
The credit score to refinance a mortgage differs by loan type and lender. Here’s the score you’ll need for most refinance loans:
- Conventional refinance. 620
- Jumbo refinance. 700
- FHA rate-and-term refinance. Refinancing an FHA loan requires a credit score of at least 500, but lenders may ask for a score of 580 or higher.
- FHA cash-out refinance. 580 to 620, depending on what you intend to use the loan for.
- FHA streamline refinance. Borrowers can submit a non-credit qualifying application that doesn’t require a hard credit check or minimum credit score. However, a credit-qualifying FHA streamline refinance can result in a lower interest rate. To qualify, you’ll need a minimum credit score of 500 or 580, depending on the LTV ratio.
- VA loans. The VA doesn’t set a minimum credit score for VA cash-out refinance or VA streamline refinance loans, but lenders may require a score ranging from 580 to 620.
- USDA loans. USDA mortgage lenders can require a credit score as high as 640, although streamlined assist refinance loans waive the credit requirements after 12 consecutive on-time payments.
Debt-to-Income Ratio
Lenders generally accept a DTI ratio as high as 50% for conforming loan refinances, although a higher DTI will likely require additional underwriting and reserve requirements.
Non-conforming loans, like jumbo loans, may require you to have a DTI of 43% or lower. Lenders often reserve their most competitive rates for borrowers with a DTI below 43%.
Home Equity
Most lenders require having at least 20% home equity before refinancing, which is the equivalent of an 80% LTV ratio. This is a common benchmark as you can waive private mortgage insurance (PMI) with an LTV ratio below 80% and qualify for more competitive rates.
Streamline refinance programs don’t have minimum equity requirements, but you’ll continue paying mortgage insurance premiums with FHA and USDA loans.
Minimum Waiting Period
Most lenders require waiting at least six months from the closing date before accepting a mortgage refinance application. This seasoning period applies to conventional, FHA, VA and USDA loans. It allows you time to establish a positive payment history and accrue more equity, potentially helping you qualify for a better interest rate and monthly payment.
Certain loans, such as an FHA cash-out refinance, have more stringent waiting periods that can be as long as 12 months and require consecutive on-time payments.
Aside from the initial post-closing waiting period, there’s no limit to how many times you can refinance a mortgage.
How To Choose the Best Mortgage Refinance Company
Refinancing gives you the opportunity to lower your monthly payment and interest rate. When comparing mortgage refinance lenders, pay attention to:
- Interest rates and APRs. Interest rates influence your monthly payment, whereas annual percentage rates (APRs) include all of the costs associated with the loan, such as mortgage insurance and origination fees. APRs are generally higher and can help you more easily compare the total cost of the loan between different lenders.
- Lender fees and discounts. Closing costs can vary by lender as some may offer ways to waive or reduce the fees. Before shopping for a refinance loan, ask your current lender if it waives any refinancing fees for existing customers.
- Loan options. Lenders offering multiple mortgage refinance options make it easier to find the financing terms you need. For example, a specialty program might be a better fit than a traditional refinance or cash-out refinance, depending on your situation.
- Customer service quality. The responsiveness of a lender’s loan agent or customer service team can be a deciding factor. A lender that offers quality support—be it over the phone or in person—might be your best choice as this can indicate a well-run company and stress-free underwriting process.
- Time to close. It may take longer for certain lenders to close on your refinance application. Factors such as current application volume and the loan type play a part. Some lenders offer on-time closing guarantees with financial incentives if there’s a lender-related delay.
How Often Can You Refinance?
In theory, you can refinance as often as you like, within the rules established by your mortgage lender. Most have an initial waiting period of six months, and for some, that “seasoning” period may last as long as 12 months.
In practice, however, refinancing is costly—expect to pay anywhere from 2% to 5% of the loan amount in closing costs—and time-consuming. You’ll need to fill out as much paperwork and provide as much documentation as you did when you originally applied for your mortgage. What’s more, your credit score takes a hit every time you apply for credit.
Though you can refinance more than once, frequent refinancing doesn’t usually make good financial sense.
Alternatives to Mortgage Refinancing
Refinancing an existing mortgage isn’t always the best option and, depending on your situation, may not even be feasible. Luckily, there are several mortgage refinance alternatives that still allow you to tap your home equity or get the money you need for other financial priorities.
- Home equity loan. A home equity loan distributes a lump sum of your available equity with a fixed interest rate over a repayment period of 10 to 30 years. Closing costs are lower than a cash-out refinance as your loan amount is smaller.
- Home equity line of credit (HELOC). An interest-only HELOC lets you make multiple withdrawals over a period of time, which keeps your upfront borrowing costs low. The best HELOC lenders may even waive the closing costs.
- Mortgage recast. Lenders offer mortgage recasting for conventional and jumbo loans. This process involves making a substantial lump sum payment, which results in a lower monthly payment by reamortizing your loan. Your remaining repayment term and interest rate remain intact. Recasting fees are lower than refinance fees, too.
- Home equity conversion mortgage (HECM). A home equity conversion mortgage is a reverse mortgage option for seniors that allows them to cash out their equity upfront without selling their house. The FHA administers this program, which has more regulations to protect borrowers than competing programs.
- Home equity agreement (HEA). A home equity agreement lets you access a lump sum of your current equity in exchange for a share of future equity appreciation. The borrower requirements and repayment schedule can be more flexible than a home equity loan or HELOC.
- Personal loan. An unsecured personal loan doesn’t require collateral to borrow money for debt consolidation, home improvements or major purchases. Your interest rate can be higher than a cash-out refinance, home equity loan or HELOC, but it may be a better option if you have a small equity position or don’t want to replace your current mortgage rate.
- 0% APR credit card. If you want to use your equity to refinance high-interest credit card debt, a 0% APR credit card lets you make interest-fee payments during the introductory period. Expect to pay a one-time balance transfer fee, but keep in mind that this expense is still less than closing costs on a refinance loan.
- Downsize. Selling your home and downsizing or relocating to a cheaper community can require more effort upfront but may improve your quality of life along with your finances. You can use the sale proceeds to pay off debt or save.
Recap: Best Mortgage Refinance Lenders Of 2024
- Best for Online Closing Process: Flagstar Bank
- Best for Medical Professionals: PNC Bank
- Best for Relationship Discounts: Chase
- Best for Online Mortgages: Better.com
- Best for Fast Preapproval: Ally
- Best for Expanded Availability: Guaranteed Rate
- Best for Saving Money On Fees: PenFed Credit Union
- Best for Existing Customers: Bank Of America
- Best for Rate-Match Guarantee: Navy Federal Credit Union
- Best for Low Minimum Credit Scores: New American Funding
- Best for Borrowers With Adverse Credit: Northpointe Bank
- Best for Flexible Mortgage Terms: Rocket Mortgage
- Best for a Seamless Application Process: SoFi
- Best for Applying Online: Truist
- Best for 24-Hour Service: LowRates.com
Methodology
We reviewed more than 50 mortgage lenders that do business both online and in-person throughout the U.S. The lenders we reviewed represent some of the largest mortgage lenders by volume, which include banks, credit unions and online lenders. Lenders that do not display their interest rates online are not eligible for review.
Forbes Advisor scores lenders based on criteria that have a meaningful impact on the cost of the mortgage, including borrower eligibility requirements; the variety of loan options; and loan features that can impact the mortgage refinancing process.
The best lenders scored the highest based on the weighting in the following categories:
- Interest rate: 20%
- Customer service experience: 20%
- Credit score minimum requirements: 20%
- Alternative credit data considered: 10%
- Preapproval time: 10%
- Closing timelines: 10%
- Loan types: 10%
- Lender discounts offered: 5 bonus points
Our focus on affordability, accessibility and key features that impact the home-buying process (like preapproval time and closing time) is what we consider reflective of today’s consumer’s top priorities when comparison shopping for mortgage lenders.
To learn more about our rating and review methodology and editorial process, check out our guide on How Forbes Advisor Reviews Mortgage Lenders.
Mortgages expert Josh Patoka contributed to this article.
Frequently Asked Questions (FAQs)
What types of mortgage refinancing are available?
The three most common types of refinance options are: rate-and-term refinance, cash-out refinance and cash-in refinance.
The rate-and-term refinance allows homeowners to lower their interest rate and/or change the term, which is the length of time borrowers must pay on their loan. For example, you might want to refinance your 30-year mortgage with a 3.5% interest rate into a 15-year mortgage with a 3% rate. This will help you lower the amount you pay in interest and pay off the mortgage faster.
A cash-out refinance gives homeowners the opportunity to access the equity in their home, with the option to also lower their interest rate.
A cash-in refinance is when homeowners apply cash to the principal, which can help them lower their loan balance, eliminate private mortgage insurance, get a better interest rate or qualify for a refinance.
How can I qualify for a refinance?
Qualifying for a refinance is the same as qualifying for a purchase home loan, as lenders want to make sure you can afford the payments and that you will make them on time per your contract.
Although each lender has different requirements, generally all lenders will look at your credit score, debt-to-income ratio, income and home equity.
For conventional mortgages, a credit score of at least 620 is recommended. The credit score minimum might also depend on your cash reserves, DTI and LTV ratio. Also, lenders usually reward high credit scores with the lowest available interest rates.
FHA loans have lower minimums than conventional mortgage refinances, but some lenders might apply a credit overlay, meaning they will raise the minimum score to offset risk like:
- 500 if your new loan has an LTV of 90% or less
- 580 if your new loan has an LTV of more than 90%
There is no credit check for an FHA streamline refinance. There are also no credit score minimums for USDA or VA refinances; however, lenders might apply their own standards to these refinances.
Can I refinance my mortgage with bad credit?
There are several ways for you to refinance your mortgage with bad credit:
• Work with your existing lender. If you want to refinance and have bad credit, your first step should be trying to work out a deal with your current lender, even as you get quotes from others. Your lender won’t want to lose your business.
• Check VA refinance program. If you are active-duty military, a veteran or a qualifying spouse, you may be able to refinance with a VA loan. The VA doesn’t have a minimum credit score requirement, although the individual lender might require a score of at least 620.
• FHA refinance programs. Another option is to refinance into an FHA loan. Loans insured by the FHA allow borrowers to qualify with scores as low as 500, depending on the program.
• Find a co-signer. You could ask a family member or friend with good credit to co-sign on your loan. However, if you’re unable to make your payments, the co-signer is legally responsible for the debt.
How can I raise my credit score to lower my interest rates?
Your payment history and the amount you owe are the two largest factors in determining your credit score. If you want to raise your score to qualify for a lower interest rate, focus on making on-time payments and paying down the balances on your current debts.
Is it better to refinance with your current lender?
If you have a poor credit score, it might be a good idea to refinance with your current lender. As an existing customer, it might allow you more leeway in terms of credit qualifications, especially if you’ve been making all your payments on time.
How long does a mortgage refinance take?
The length of the mortgage refinance process varies by loan and lender. Approval usually takes about 30 to 45 days, but it’s not uncommon for the timeline to extend beyond that range.
The time to close depends on several factors, such as your diligence with getting the required documents to your lender and the type of loan you plan to take out. For example, government-backed mortgages can take longer to close than a conventional loan.