With interest rates projected to stay low well into 2021, homeowners can take advantage of historically low refinance options to reduce their monthly payments by as much as $1,000 or lower their loan terms and pay off their mortgage quicker. To make the decision easier, we have a mortgage refinance calculator that can help you estimate how much you might be able to save.
Our Top Picks for Best Mortgage Refinance Companies of 2021
- Rocket Mortgage by Quicken Loans: Best Overall
- Bank of America: Best for Member Discounts
- Loan Depot: Best for Online Mortgage Refinancing
- Navy Federal: Best from Credit Union
- Nationwide: Best for Borrowers with Poor Credit
We selected our top 5 picks for best mortgage refinancing companies, as an extension of Money’s Best Mortgage Lenders. However, our vetting method left out some of the largest loan originators in the US. We believe these providers are still worth mentioning in our Better Than Most section. Continued improvement in areas like customer service and information accessibility is essential for them to rank higher.
Best Mortgage Refinance Companies Reviews
Rocket Mortgage by Quicken Loans Review - Best Refinance Lender Overall
|Best rated for customer support, with over 3,000 Home Loan experts available 7 days a week over the phone||No in-person service|
|Variety of loan products including adjustable-rate mortgage, 15- and 30-year mortgage, FHA, VA and USDA loans|
|Streamlined online application process with eClosing|
|Digital platform allows customers to import property taxes, home insurance info, and integrate with their bank|
|Ranked as the nation’s top refinance originator by the MBA|
|Features a mortgage refinance rates calculator|
We chose Rocket Mortgage by Quicken Loans (NMLS#3030) as the best refinance mortgage lender overall because of its great track record in customer satisfaction, in-depth digital software, and web-based customer support.
Bank of America Review - Best For Member Discounts
|Exclusive membership discounts available on both purchase and refinance closing costs||No renovation loans|
|Offers conventional, 5/1 adjustable-rate mortgages, FHA, VA and USDA loans along with 15- and 30-year mortgages|
|Preferred Rewards program members can get an up to $600 reduction of their purchase or refinance origination fees in closing costs|
|Preferred Rewards tiers have discount levels based on qualifying balances in Bank of America or Merrill investment accounts|
|Physical branch locations available nationwide|
|Considers alternative credit data such as utility bills and rental payment history|
One of the nation’s leading mortgage leaders, Bank of America (NMLS# 399802) has comprehensive digital services, including an online tool to track the progress of your mortgage loan and refinance application in real-time.
loanDepot Review - Best For Online Mortgage Refinance
|Fixed-rate mortgage, ARM loans, jumbo loans, VA and FHA loans, and HARP loans||Loan rates are not available online|
|"mello smartloan" digital platform streamlines the entire loan process, from application to closing, cutting time by u to 17 days|
|Lifetime guarantee to waive lender fees and reimburse appraisal fees on future refinances after using them at least once|
|Low number of complaints|
|200 locations nationwide and over 1,700 affiliated licensed loan professionals|
While loanDepot (NMLS# 174457) innovated a fully digital process, it still has licensed loan consultants available who can help the consumer request information on their mortgage rates and select the best mortgage product for their particular financial situation.
Navy Federal Credit Union – Best from Credit Union
|Online pre-approval application||Membership is limited to veterans, active-duty military, and their families|
|Conventional, Cash-Out, VA loans, VA Streamline, Jumbo, and Fixed and adjustable-rate mortgage loans||No FHA, USDA loans, construction loans, or reverse mortgages|
|Sellers can contribute up to 6% of the value of the home towards closing costs|
|Doesn’t require private mortgage insurance (PMI)|
|Customers who close using Realty Plus may get $400-$8,000 cash-back|
Navy Federal (NLMS #399807) features Realty Plus and Navy Federal Title Services, tools that facilitate the mortgage refinance process for homebuyers looking to refinance or sell and buy new property.
Nationwide: Best for Borrowers with Poor Credit
|Offers VA loans, FHA loans, Conventional loans, Jumbo loans, Refinance No Cash-Out and Cash Out options||Only operates in eight states: California, Colorado, Texas, Idaho, Washington, Oklahoma, Montana, North Dakota|
|3-year Lease Option to buy Program requires a 10% down payment and enough income for rent payment|
|Options for self-employed and low credit buyers|
|Best Rate Guarantee matches competitor’s loan estimate offers|
Nationwide Home Loans (NMLS #331347) features a Lease Option Program during which you can live in your new home for 3 years (paying the lease) while Nationwide helps you improve your credit score, sort out income reporting requirements, or perform whatever other steps are necessary to help you get ready to purchase the home.
What Do You Need to Refinance Your Mortgage?
Regardless of the type of loan, there are three primary considerations lenders consider when applying for a new mortgage refinance: credit score, debt-to-income ratio, and average loan-to-value ratio (LTV).
Debt-to-income ratio (DTI) of Less Than 50%
Your debt-to-income ratio consists of all of your monthly debt payments added up and then divided by your gross monthly income. The DTI helps lenders determine your ability to manage payments and plays a key role when applying for refinancing.
Lenders usually require that your debt-to-income ratio be 50% or less to qualify for a Federal Housing Administration (FHA) loan refinance. Meanwhile, conventional loans may allow DTI ratios of up to 43%, according to the Consumer Financial Protection Bureau (CFPB).
To get you started, we have a tool to calculate your current DTI ratio.
A Healthy FICO Credit Score
Refinance lenders have minimum credit score requirements. Experian, Equifax, and My Fico are authorized FICO score retailers. However, you can still obtain free copies of your credit report from the three main credit reporting bureaus — TransUnion, Equifax, and Experian — at annualcreditreport.com once a year.
Average Loan-to-Value Ratio (LTV) of 20% or More
The LTV is the amount of the loan you want to take out divided by the appraised value of your home. Most lenders require that borrowers have at least 20% in equity to qualify for a refinance.
Things You May Need to Apply
When applying for a mortgage refinance, lenders will ask you for specific documents. Check out the list below to ensure you have everything you need:
|✓ A copy of your government-issued ID or Social Security card|
|✓ A recent copy of your credit report|
|✓ Proof of income for the last 30 days|
|✓ W-2s for the past 2 years|
|✓ Federal tax returns (personal and business) for at least the last 2-3 years|
|✓ Written explanation if employed less than two years or if there’s a gap or change in employment|
|✓ Statements of outstanding debt, and all current expenses|
|✓ Address of property to be refinanced and purchase contract|
|✓ Homeowners insurance information such as the agent’s name and contact information|
|✓ Statements of assets|
|✓ Bankruptcy/ discharge papers if applicable|
Credit Repair FAQs
What is mortgage refinancing?
Refinancing a mortgage is, essentially, replacing a current loan with a new one – whether changing the terms, interest rates, or amount borrowed. In the best cases, refinancing can help you save money on your mortgage payments by negotiating low rates, or by reducing your term.
What are the benefits of refinancing?
- Lowering your interest rate. You can take advantage of the best mortgage refinance rates and potentially save thousands of dollars over the life of the loan
- Shortening the life of your loan. Extending your loan may result in a lower monthly payment with higher interest, while reducing your repayment plan to a shorter loan term may result in a higher monthly payment.
- Consolidating debt & gaining cash with cash-out refinancing. A cash-out refinance replaces your current home loan with a new mortgage that’s higher than your outstanding loan balance, so you can withdraw the difference between the two mortgages in cash. You can consolidate high-interest debt from old credit cards. This will not only help you pay off your debt faster but can also save you hundreds to thousands of dollars down the line. An alternative to a cash-out refinance, which uses the equity you've accumulated in your home, is a HELOC (home equity line of credit).
- Getting rid of private mortgage insurance. You may be able to have your private mortgage insurance (PMI) removed if your new mortgage is 80% or less of the home’s current appraised value or loan-to-value ratio (LTV). Refinancing is the only option to cancel this type of insurance on most government-backed loans, such as Federal Housing Administration (FHA) loans. You will have to refinance your current loan from a government-backed loan to a conventional mortgage to get rid of PMI.
- Reducing financial risk. If you have an adjustable-rate mortgage (ARM), shifting to a fixed-rate mortgage can secure your rate for the remainder of the loan. This lowers risk, as you no longer must worry about fluctuating interest rates.
- Adding or removing a loan cosigner Lenders may ask you to prove that you can make monthly mortgage payments on your own. This will require some additional paperwork to document your income, debt, and credit history. The other cosigner may also have to provide evidence that they are willing to withdraw from the mortgage contract.
When to refinance a mortgage?
The best time to refinance a mortgage is when the interest rates are lower than the one you locked in at the time of closing your mortgage. Lower interest rates will allow you to reduce your term and monthly payments.
How much does it cost to refinance a mortgage?
Refinancing your mortgage can cost around 2% to 6% of your loan amount.
What is the best refinance company?
Shopping around for a mortgage refinance company will help you get the best financial deal. We compared the best refinance companies and came up with a list of top companies, including Rocket Mortgage by Quicken Loans (Best Overall), Bank of America (Best for Member Discounts), and loanDepot (Best for Online Convenience).
What are today’s mortgage refinance rates?
Mortgage and mortgage refinance rates have been declining since 2019, hitting historical lows in 2020. Here are the most recent numbers.
Mortgage Refinance Companies
We looked at the refinance loan offers of the largest lenders in the industry and the ways in which they’re simplifying the application process for these types of mortgage products. We considered lenders that provided online tools, pre-approval, discounts, or exclusive refinance programs.
We considered lender size and reach, and reputation for customer satisfaction. To determine lender originations, we relied on the 2020 report from the Mortgage Bankers Association. As for customer sentiment, we consulted J.D. Power’s U.S. Primary Mortgage Origination Satisfaction Study. Finally, we checked the NMLS (Nationwide Multistate Licensing System, or “Nationwide Mortgage Licensing System”) database for any regulatory actions taken against each company we analyzed.
Consumer feedback and expert input
We vetted each based on the most important attributes of a lender according to expert interviews and consumer feedback from a short poll that ran on Money’s social media platforms. After weighing professional and consumer opinion accordingly, we identified our top picks in the mortgage refinance industry.