We may earn a fee if you click on the links below. Compensation does not determine ranking. Not all brands are included. Learn more.

By:
Editor: and
Published: Jun 11, 2024 27 min read

Money's main takeaways:

  • Mortgage rates are near 7% and aren’t likely to see a large drop in the coming weeks. Carefully consider the pros and cons of refinancing before opting for a rate and term refi.
  • Many homeowners have gained a significant amount of equity over the last few years. A cash-out refinance, home equity loan or line of credit could be a good option
  • Look for competitive rates, but remember to also consider fees and loan offerings when choosing the right lender.
  • Our picks for best refinance mortgage companies include Rocket Mortgage (best overall) Navy Federal (best credit union) and Ally Financial (best for jumbo loans).
Ads by Money. We may be compensated if you click this ad.AdAds by Money disclaimer
Sort by:
Origination Volume (2022)
Our Partner
Company Highlight
Our Partner

Start that home repair, improvement or other big project

  • Get rates and terms personalized for your unique needs
  • Use online tools that put the power in your hands
  • Enjoy award-winning client service from a subsidiary of Quicken Loans
  • Home equity loans available
  • Services almost all its loans

Trustpilot Rating4.7 out of 5
Origination Volume (2022)46,756
Our Partner

Prequalify online in minutes with no impact to credit

  • Get a customized rate quote in 3 minutes
  • No SSN or hard credit pull required to get credit approved
  • Low refinance rates, Cashout refinance and Home Equity financing
  • A+ rating with BBB with 21 years experience
  • Variety of loan options and closing costs. Compare AmeriSave today!

Trustpilot Rating4.4 out of 5
Origination Volume (2022)4,667
Our Partner

600 minimum credit score 

  • Access your home's equity with a Cash-Out Refinance
  • Refinance up to 100% of your primary home’s value
  • FDIC Bank since 1919 with A+ BBB Rating
  • Pay off your mortgage at any time—no pre-payment penalties
  • Conventional, FHA, VA, bank statement and rental income only loans

Trustpilot Rating4.5 out of 5
Origination Volume (2022)266
Our Partner

Highest in customer satisfaction in the U.S.

  • Award-winning client service & A+ rating with the BBB
  • eClosing allows customers to close electronically to save time
  • Multiple loan & refinance options to fit your needs
  • Fortune 100 Best Companies to Work For 2017
  • Proud supporter of college athletics

Trustpilot Rating4.6 out of 5
Origination Volume (2022)0

Why Trust Us?

Money has been providing its readers with in-depth product reviews and financial advice for over 50 years. Our mortgage refinance lender reviews are the result of hours of research and analysis of over 20 lenders. We evaluated the variety of loan types offered, average interest rates, customer service ratings and the number of complaints filed against each lender, among other factors. We also relied on rankings and data from expert sources, including the Mortgage Bankers Association, J.D. Power’s Mortgage Origination Satisfaction Study and the National Multistate Licensing System (NMLS).

Our Top Picks for the Best Mortgage Refinance Lenders of June 2024

The companies below are listed in alphabetical order:

Ads by Money. We may be compensated if you click this ad.AdAds by Money disclaimer
Lock in a competitive interest rate by refinancing your mortgage
A lower rate could translate to lower payments, which means you’ll pay less for your home overall. Click on your state to start saving today with the help of New American Funding (NMLS #6606).
HawaiiAlaskaFloridaSouth CarolinaGeorgiaAlabamaNorth CarolinaTennesseeRIRhode IslandCTConnecticutMAMassachusettsMaineNHNew HampshireVTVermontNew YorkNJNew JerseyDEDelawareMDMarylandWest VirginiaOhioMichiganArizonaNevadaUtahColoradoNew MexicoSouth DakotaIowaIndianaIllinoisMinnesotaWisconsinMissouriLouisianaVirginiaDCWashington DCIdahoCaliforniaNorth DakotaWashingtonOregonMontanaWyomingNebraskaKansasOklahomaPennsylvaniaKentuckyMississippiArkansasTexas
View Options

Best Mortgage Refinance Reviews

Why we chose it: Ally Financial is our pick for the best mortgage refinance company for jumbo loans because it has a high lending cap and charges no lender fees.

Pros
  • Online application, document uploads, and electronic signature options
  • No lender fees
  • Quotes don't impact your credit score
Cons
  • You may be required to pay PMI if your down payment is less than 20%
HIGHLIGHTS
J.D. Power Rating
729/1000
NMLS Regulatory Actions
None
Min. Credit Score
700 for Jumbo
Refi Loan Types
Fixed-rate, ARM, Jumbo, Cash-out

Ally Financial (NLMS# 181005) can refinance jumbo loans up to $4 million, which is higher than many of its competitors. Plus, jumbo refinancing isn’t limited to single-family homes. The online lender can also refinance vacation homes and investment properties.

There are several jumbo loan options, including rate, term and cash-out refis. Borrowers can choose from fixed or adjustable-rate loans. Ally also has non-jumbo refinance loans as part of its mortgage product offering.

A big plus for borrowers is that Ally doesn't charge any mortgage origination, application, loan processing, or underwriting fees on any of its loans, which can reduce the cost of borrowing by several thousand dollars. Ally’s streamlined application can be completed in about 15 minutes, and the lender says it can close on the loan about 10 days faster than the industry average.

See rates on Ally Financial's Secure Website >>


Why we chose it: Bank of America’s Preferred Rewards program can help reduce lender fees and provide rate reductions for eligible borrowers, making this lender our choice for member rewards.

Pros
  • Exclusive membership discounts available on both purchase and refinance closing costs
  • Physical branch locations available nationwide
  • Considers alternative credit data such as utility bills and rental payment history
Cons
  • No renovation loans
HIGHLIGHTS
J.D. Power Rating
747/1000
NMLS Regulatory Actions
10
Min. Credit Score
N/A
Refi Loan Types
Fixed-rate, ARM, FHA, VA, Cash-out, Home Equity

Bank of America (NMLS# 399802) Preferred Rewards members can reduce the closing costs or loan origination fees on their purchase or refinance loan by as much as $600.

How much you can reduce borrowing costs will depend on your membership tier, which ranges from Gold to Platinum Honors. Discount levels are determined by the balances in the Reward member’s banking and Merrill Investment accounts. Other benefits are contingent on the borrower enrolling in PayPlan, which is Bank of America’s automatic payment service and is linked to one of the bank’s deposit accounts.

Bank of America loan options include rate, term, and cash-out refis for conventional loans, as well as FHA and VA refinancing. You can also choose between a fixed-rate and an adjustable-rate loan. The lender also has a large number of branch locations throughout the country if you prefer in-person service.

See rates on Bank of America's Secure Website >>


Why we chose it: Homeowners who decide to refinance with Better can close on their loan quicker than the competition in most cases, making the online lender our choice for the fastest closing times.

Pros
  • Fast online process, with competitor price-match program
  • No origination, application or underwriting fees
  • Smart tech automatically looks for and applies eligible discounts
Cons
  • Online-only, no brick and mortar branches
  • Limited refinance loan type options
HIGHLIGHTS
J.D. Power Rating
715/1000
NMLS Regulatory Actions
5
Min. Credit Score
620
Refi Loan Types
Conventional, Fixed-rate, ARM, FHA, Jumbo

Better Mortgage (NMLS ID# 330511) uses the latest technology to make the loan and application process easy, straightforward and fast. According to Better, it can close on a refi 10 days faster than other lenders.

Because it’s a fully online lender, Better foregoes many fees — such as application, underwriting and origination fees — charged by traditional brick-and-mortar lenders. The lender’s loan officers don’t charge commission, either.

Another perk is the Better Price Guarantee. The lender says it will match any valid competitor’s offer or pay you $100. Using the lender’s mortgage payment and amortization calculators can estimate how much you can save when you refinance.

See rates on Better's Secure Website >>


Why we chose it: loanDepot is our pick for the best online lender because of its smooth application process and nationwide availability.

Pros
  • Licensed in all 50 states with over 200 locations in 43 states
  • Streamlined digital platform
Cons
  • Loan rates are not available online
HIGHLIGHTS
J.D. Power Rating
692/1000
NMLS Regulatory Actions
1
Min. Credit Score
620 (580 for FHA)
Refi Loan Types
Conventional, fixed-rate, ARM, VA, FHA

loanDepot’s (NMLS# 174457) proprietary “mello'' software uses artificial intelligence to help power its fast and easy mortgage application process. The lender’s fully digital loan portal, called “mello smartloan,” can securely collect your financial information, including your income, assets and employment data. Applying for a loan takes only a few minutes

Homeowners who already have a mortgage with loanDepot can take advantage of its Lifetime Guarantee, which eliminates lender fees when you refinance your loan. Customers who refinance their home equity line of credit (HELOC) can get a half-point fee waiver on closing costs.

Another perk? loanDepot services its loans, so you don’t have to worry about your mortgage getting sold to another company that may not provide the same level of service.

See rates on loanDepot's Secure Website >>

Why we chose it: Nationwide’s variety of loan products, flexibility and cash back perks make it our choice for best custom loans.

Pros
  • Options for self-employed and low credit buyers
  • Customizable terms
  • $0 lender fee offer
  • Free consultations
Cons
  • Only operates in CA, CO, TX, ID, WA, OK, MT and ND
HIGHLIGHTS
J.D. POWER RATING
Not Rated
NMLS REGULATORY ACTIONS
None
Min. Credit Score
N/A
Refi Loan Types
Conventional, VA, FHA, Jumbo

Nationwide, in partnership with Axos (NMLS # 524995), provides a variety of refinance loans that can be customized to fit the financial needs of the borrower.

Loan programs include conforming, FHA, VA and jumbo loans, as well as customized portfolio loans, HELOCs and investment property loans. Plus you can easily keep track of mortgage rate movements with the lender’s rate watch option, which sends an alert when rates reach a level that interests you.

The lender also offers several solutions designed to lower your borrowing costs. Borrowers who pay their mortgage from an Axos Total Loan Rewards Checking Account, for one, can get up to 3% annualized cash back on their payments.

See rates on Nationwide's Secure Website >>


Why we chose it: Navy Federal’s fast online pre-approval process and flexible loan terms make it our choice as the best mortgage refinance credit union for members of the American armed forces.

Pros
  • Online pre-approval application
  • Doesn't require private mortgage insurance (PMI)
Cons
  • Membership is limited to veterans, active-duty military, and their families
  • No FHA, USDA loans, construction loans, or reverse mortgages
HIGHLIGHTS
J.D. Power Rating
753/1000
NMLS Regulatory Actions
None
Min. Credit Score
N/A
Refi Loan Types
Fixed-rate Conventional, Cash-out, VA, VA Streamline, ARM, Jumbo

Navy Federal (NLMS# 399807) has mortgage refinancing options with flexible loan terms ranging from 10 to 30 years. Refi options include VA loans, interest rate reduction refinance loans (IRRRL), conventional mortgages, and fixed loans.

A few of the lender’s standout options include the Military Choice loan, designed for borrowers who have exhausted their VA loan benefit, and the Homebuyers Choice loan, which allows homeowners to refinance 97% of their home’s value and take cash out. Neither option requires a down payment.

These loans also offer a no-refi rate drop: borrowers who qualify for this benefit and purchase a home with a Navy Federal mortgage can reduce the interest rate on their loan without refinancing if rates drop in the future.

See rates on Navy Federal's Secure Website >>


Why we chose it: Rocket Mortgage (formerly Quicken Loans) has consistently ranked the highest in customer satisfaction surveys and offers a variety of loan options, making it our top pick for the best overall refinance lender.

Pros
  • Rated best mortgage servicer by JD Power
  • Streamlined online application process with eClosing
  • Features a mortgage refinance rates calculator
Cons
  • No in-person service, but you may reach out to an affiliated broker
HIGHLIGHTS
J.D. Power Rating
759/1000
NMLS Regulatory Actions
4
Min. Credit Score
620 (580 for FHA)
Refi Loan Types
15- and 30-year Conventional, ARM, FHA, VA, Jumbo, home equity loans

Rocket Mortgage (NMLS ID# 3030) is well known for its customer service and easy online application process. The lender offers various refinancing alternatives, including rate and term refinancing, cash-out refinancing and home equity loans.

Low-income borrowers or those with high debt-to-income ratios (up to 65%) who currently have a loan owned by Fannie Mae or Freddie Mac can also find refi options with Rocket. The RefiNow and Refi Possible provide a reduction of at least 0.50 percentage points off their current mortgage rate. Homeowners can also apply for up to $500 in grants to help pay for appraisal costs.

Other refinance options include VA, FHA and jumbo loans. Although Rocket is primarily an online lender, you can also get in-person service through one of its affiliated mortgage brokers.

See rates on Rocket Mortgage's Secure Website >>


Why we chose it: Zillow is our choice for the best mortgage refinancing marketplace because of its ability to connect borrowers with a variety of licensed lenders nationwide.

Pros
  • User-friendly mobile app
  • Wide range of online resources, including a mortgage calculator
  • Easy access to competitive rates, updated daily
  • Most of the application process is performed online
  • Licensed in 49 states and the District of Columbia, not licensed in NY
Cons
  • No program to help homebuyers with bad credit
HIGHLIGHTS
J.D. POWER RATING
Not Rated
NMLS REGULATORY ACTIONS
None
MIN. CREDIT SCORE
620 (Conventional), 620 (FHA), 620 (VA), 700 (Jumbo)
REFI LOAN TYPES
Fixed-rate, ARM, Jumbo, VA, FHA, Conventional Conforming

Zillow Home Loans (NMLS ID#: 10287) is the lending arm of Zillow, the real estate listing site. Its Lender Directory lets homeowners search for mortgage providers by city, state, zip code or name of a specific bank or loan officer.

You’ll have access to various lending sources, from mortgage brokers and brick-and-mortar banks to credit unions and online lenders. You can compare offers from Zillow to those available from other lenders to find the best fit for you. You can start the application directly on the website.

Zillow offers several resources to help you decide whether a refi is right for your needs. These tools include a mortgage refi comparison tool that allows you to compare rates for different loan types and see how they stack up to the market average.

See rates on Zillow's Secure Website >>

Ads by Money. We may be compensated if you click this ad.AdAds by Money disclaimer
Want to lower your mortgage payments? Refinancing can help!
Take the first step toward refinancing your mortgage today by seeking out the priceless data you'll need to get through the process from Rocket Mortgage (NMLS #3030). To find out more, click below.
View Options

Other mortgage refinance companies we considered

Through our research on the mortgage lending industry, we found that many of the biggest lenders don’t necessarily offer the best refinance products. (Though they might excel in other areas.)


Alliant Credit Union Review

Why we didn’t choose it: We didn’t choose Alliant Credit Union (NMLS# 197185) because of the limited number of refinancing options available.

Pros
  • Rate watch sends a notification when rates have hit your target
  • Complete the application process online
Cons
  • No government-backed loans
  • Doesn't disclose loan fees
  • No in-person banking
  • Must be a member to qualify
HIGHLIGHTS
J.D. Power Rating
Not Rated
NMLS Regulatory Actions
1
Min. Credit Score
620
Refi Loan Types
Fixed, ARM, Jumbo

See rates on Alliant's Secure Website >>


AmeriSave Mortgage Review

Why we didn’t choose it: We didn’t choose AmeriSave Mortgage (NMLS# 1168) because its site lacks information about refinancing costs and fees.

Pros
  • Wide variety of loan options
  • Closing time average of 25 days
Cons
  • Doesn't disclose origination fees or closing costs
  • Not available in New York

HIGHLIGHTS
J.D. Power Rating
725/1000
NMLS Regulatory Actions
2 within the last five years
Min. Credit Score
620
Refi Loan Types
Rate and Term, Cash-out, FHA, USDA, VA

See rates on AmeriSave's Secure Website >>


Chase Review

Why we didn’t choose it: We didn’t choose Chase (NMLS# 399798) because it doesn’t waive any origination or other closing cost fees, nor does it offer rate discounts for existing Chase customers.

Pros
  • Large variety of loans: ARMs, 10-, 15-, 20-, 25- and 30-year mortgages, FHA and VA loans and DreamMaker Mortgage Program
  • Competitive mortgage interest rates
  • Online Refinance Learning Center with calculators for loan estimates, interest rates and terms
Cons
  • Charges standard closing costs on refinance loans
  • No rate discounts for existing customers
HIGHLIGHTS
J.D. Power Rating
733/1000
NMLS Regulatory Actions
None
Min. Credit Score
620
Refi Loan Types
DreamMaker®, Fixed-rate, FHA, VA, Jumbo, ARM

See rates on Chase's Secure Website >>


Guild Mortgage Review

Why we didn’t choose it: We didn’t choose Guild Mortgage (NMLS# 3274) because its loan products are not available in all states.

Pros
  • Online mortgage application, e-signatures and digital loan process tracking
  • Direct lender, services its own loans
  • Closing cost and total payment calculator
  • Highest rated by JD Power's US Primary Mortgage Originator Satisfaction Study
Cons
  • Not available in NY or NJ
  • Rates aren't available online unless you apply
  • Does not disclose fees
  • Branches only in 33 states
HIGHLIGHTS
J.D. Power Rating
702/1000
NMLS Regulatory Actions
None
Min. Credit Score
640
Refi Loan Types
Fixed, ARM, Cash-out, FHA, VA, USDA, Jumbo, Reverse

See rates on Guild Mortgage's Secure Website >>


PNC Bank Review

Why we didn’t choose it: We didn’t choose PNC Bank (NMLS# 446303) because the application process cannot be fully completed online.

Pros
  • Has current mortgage rates and helpful calculators on its site
  • Home insight planner and application tracker
  • Considers non-traditional credit history
  • Online mortgage preapproval
Cons
  • The process can't be fully completed online
  • No branches in AK, AZ, AR, CA, CT, HI, ID, IA, LA, ME, MN, MS, MT, NE, NV, NH, NM, ND, OK, RI, SD, UT, VT, WA or WY
HIGHLIGHTS
J.D. Power Rating
704/1000
NMLS Regulatory Actions
None
Min. Credit Score
620
Refi Loan Types
Fixed, ARM, Cash-out, Jumbo, FHA, VA, USDA

See rates on PNC Bank's Secure Website >>


SunTrust Review (now Truist)

Why we didn’t choose it: We didn’t choose SunTrust (NMLS# 399803) because there is no transparent information on fees and closing costs on the website.

Pros
  • Online mortgage application and tracking software
  • Comprehensive educational resources
Cons
  • Customized rates are only available with an application
  • Branches only in AL, AZ, DC, FL, GA, MD, NC, SC, TN and VA
  • Fees not available online
HIGHLIGHTS
J.D. Power Rating
728/1000
NMLS Regulatory Actions
0
Min. Credit Score
620
Refi Loan Types
Cash-out, VA IRRRL

See rates on SunTrust's Secure Website >>


U.S. Bank Review

Why we didn’t choose it: We didn’t choose U.S. Bank (NMLS# 402761) because of its limited refinancing options.

Pros
  • Variety of refinance loan offerings
  • Rewards homeowners with an existing first mortgage with U.S. Bank
  • Great online tools, with a fully digital application and a proprietary app
  • Provides general mortgage rates, with the option to see results by state
  • Online prequalification
Cons
  • Customer satisfaction rating was below average
  • Mortgage rates on the website assume a higher-than-average credit score
HIGHLIGHTS
J.D. Power Rating
730/1000
NMLS Regulatory Actions
4
Min. Credit Score
620
Refi Loan Types
Conventional, FHA, VA, USDA, Cash-out, IRRL

See rates on U.S. Bank's Secure Website >>


Veterans United Home Loans Review

Why we didn’t choose it: We didn’t choose Veterans United (NMLS# 1907) because it offers limited refinancing options.

Pros
  • Free credit counseling
  • Representatives available 24/7
Cons
  • Only has physical branches in 18 states
  • Won't refinance FHA or USDA loans
  • Doesn't disclose closing costs or fees
HIGHLIGHTS
J.D. Power Rating
777/1000
NMLS Regulatory Actions
2 within the last five years
Min. Credit Score
620
Refi Loan Types
Fixed, ARM, Jumbo, VA IRRRL, Cash-out

Change to highlight:

NMLS Regulatory Actions

2 within the last 5 years

See rates on Veterans United's Secure Website >>


Ads by Money. We may be compensated if you click this ad.AdAds by Money disclaimer
A higher credit score could lead to a lower refinance interest rate
Credit Repair companies can help you get back on track to increase your score before you apply to refinance your mortgage.
View Plans

Mortgage Refinance Guide

If you buy a home when mortgage interest rates are high, you’re not stuck with that rate forever. Refinancing your mortgage is a straightforward process, and though you’ll pay closing costs, you won’t have to meet a minimum down payment requirement to close.

You can also refinance your mortgage to take advantage of the increased equity you’ve built up in your home. The proceeds of the new loan can be used to pay off high-interest debt like student loans or to finance home improvement projects.

When you refinance, you replace your current loan with a new mortgage. Our mortgage refinance guide is designed to help people refinancing their home loans for the first time make an informed decision. Read on to learn about different types of mortgage products, the benefits of refinancing a mortgage and what documents financial institutions require for a complete application.

Types of mortgage refinance

By understanding the different loan types, you can zero in on the best mortgage refinance lenders and products for your needs.

Rate-and-term refinance

A rate-and-term refinance allows you to take advantage of low rates. You take out a new loan with the same loan balance as your existing mortgage. Ideally, you’ll get a low interest rate, a shorter repayment term or both. Rate-and-term is the most common type of refi. An example of a rate and term refi is switching from an adjustable-rate mortgage to a fixed-rate mortgage.

What to know:

  • You can use this type of refi to switch from an adjustable-rate to a fixed-rate mortgage
  • Also known as a “no-cash-out” refinance

What to watch out for:

  • You’ll have get an appraisal and pay closing costs again

Zero-closing-cost refinance

Some lenders offer “no-closing-cost” or “zero-closing-cost” refinance loans to qualifying applicants.

What to know:

  • You’ll still pay closing costs (and any interest that accrues), but they’ll be rolled into the mortgage loan and not an upfront cost

What to watch out for:

  • Because closing costs are rolled into the loan amount, monthly payments are higher than a rate-and-term refinance

Cash-out refinancing

One of the benefits of homeownership is the long-term increase in home values. A cash-out refinance converts a portion of the home equity you’ve accumulated into cash, similar to a home equity loan or home equity line of credit (HELOC). A cash-out refi replaces your existing mortgage with a new loan at a higher balance.

What to know:

  • You can take advantage of an increase in your home’s value with a tax-free cash advance paid to you at closing
  • These funds are often used to make home improvements

What to watch out for:

  • You could end up with a higher interest rate and monthly payment
  • Make sure you borrow an amount that’s feasible to pay off

Cash-in refinance

If you have an underwater mortgage, a cash-in refinance allows borrowers to lower their mortgage principal during a refinance negotiation. With this type of loan, the borrower makes a lump sum payment on their mortgage, lowering the principal balance on their new loan.

What to know:

  • This option could improve the chances of an underwater mortgage qualifying for a refinance
  • If you pay down enough of the principal to increase your equity above 20%, it will eliminate your monthly private mortgage insurance (PMI) payments
  • Most lenders require a loan-to-value ratio (LTV) of at least 80%

What to watch out for:

  • Your funds will be tied to your home, so you won’t be able to use them to pay off other debt, cover emergency expenses or invest

Streamline refinance

A streamline refinance allows borrowers who meet the qualification requirements to refinance existing government-backed loans, such as an FHA loan, USDA loan or VA loan, with limited documentation or underwriting.

What to know:

  • These loans generally don’t require appraisals and may or may not require employment and income verification
  • You need to show a history of on-time monthly mortgage payments

What to watch out for:

  • Government-backed loans have specific qualification requirements for borrowers

Low-income enterprise-backed mortgage refinance

In summer 2021, Fannie Mae and Freddie Mac, under the auspices of the Federal Housing Finance Agency (FHFA), implemented new refinance options for low-income borrowers. Eligible borrowers can now refinance their mortgage at a reduced interest rate and lower monthly payments.

The Federal Government has several other programs for borrowers with financial difficulties, including the Home Affordable Refinancing Program (HARP).

What to know:

  • According to the Federal Housing Finance Agency (FHFA), borrowers may be able to save an estimated $100 to $250 per month

What to watch out for:

  • This option is not available for cash-out refinancing loans
  • You need to have lived in the home for at least one year before doing this kind of refi
  • Only applies to single-family homes.

To meet eligibility requirements, borrowers must:

  • Have a mortgage backed by Fannie Mae or Freddie Mac (the Enterprises) for the house they live in
  • Have an income at or below 80% of their residential area’s median income
  • Have no missed payments in the past six months and no more than missed payment in the past 12 months
  • Have a debt-to-income ratio below 65% or a FICO credit score of at least 620
  • Have a mortgage LTV ratio lower than 97%

How does refinancing work?

Refinancing a mortgage works by replacing your existing home loan with a new one. That means your interest rate, monthly payment and loan term will all change.

Say you obtained a $300,000 mortgage at 6% interest, with a monthly payment of $1,799. After 14 years, you have a remaining balance of $223,000 and decide to refinance into a new 30-year mortgage at 5% interest. Your new monthly payment will be $1,197, and your new payback time is 30 years.

Many homeowners are attracted to refinancing because of the possibility of finding lower interest rates, but there are other reasons for taking out a new home loan — like using home equity to pay off higher-interest debt and shortening the term of the loan.

If, for example, you have an outstanding balance of $247,000 on your 30-year mortgage after seven years at 6% interest, your current monthly payment would be about $1,499. You can refinance into a 15-year fixed-rate loan at 5%, which would bring up your monthly payment to $1,949, but you’ll pay off your home in a total of 22 years instead of 30 (and save a lot of money on interest in the process).

Before deciding on a lender, shop around and get rate quotes from at least three different lenders. You’ll have to provide all your financial information to get a personalized rate. Once you decide on a lender, make sure the quoted rate won’t change by getting a rate lock. If you have bad credit, work on improving it before you apply for a new loan, since borrowers with high credit scores typically get the lowest rates.

How soon can you refinance a mortgage?

How soon you can refinance your mortgage will depend, in part, on the requirements outlined by your lender — like having a good credit history and enough money in the bank to cover the costs of refinancing.

The type of loan you have will also affect your refi timeline. In the case of conventional loans, you may be able to refinance immediately. Some lenders may require a “seasoning” period, where you have to make a minimum number of monthly payments before being eligible to refinance, which you may be able to circumvent by choosing a different lender.

For FHA loans, you’ll need to have made at least six monthly payments before you can do a rate and term refinance. VA loans also require at least six months of payments, while USDA loans require 12 months of payments.

For a cash-out refinance, you’ll need to have a record of between six and 12 months of payments before you can refinance, depending on the type of loan and the lender. If you’re thinking about refinancing your loan, check with your lender to see what requirements they may have.

Should you refinance your mortgage?

If you’re on the fence about going through with a mortgage refinance, here’s some info on the pros and cons of refinancing, what the money can be used for, and the documentation you’ll need to provide to complete an application.

Under the right circumstances, refinancing can help:

  • Secure a lower interest rate on your mortgage
  • Lower your monthly payment
  • Shorten your loan term
  • Pay off higher-interest debt like credit cards
  • Improve your personal finances

Should I refinance with my current lender?

Before selecting a refinance mortgage lender:

  • Shop around and request loan estimates from multiple lenders

What do you need to refinance your mortgage?

There are three primary factors lenders consider when reviewing mortgage refinance applications: credit score, debt-to-income ratio and loan-to-value ratio (LTV).

  • A low debt-to-income (DTI) ratio: You need a DTI of up to 43% for conventional loans or less than 50% for an FHA mortgage refinance, according to the Consumer Financial Protection Bureau (CFPB). Use our DTI ratio calculator to figure out where you stand.
  • A healthy FICO credit score: Most mortgage refinance lenders require a minimum credit score requirement of 620, but you’ll get the best rates for a score that’s 740 or higher.
  • A Loan-to-value ratio (LTV) of 80% or less: LTV is the amount of the loan you want to take out divided by the appraised value of your home.

You will also have to submit additional paperwork related to your income and the property you are refinancing.

Documentation required to apply for a mortgage refinance:

☑ A copy of your government-issued ID or Social Security card

☑ 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

☑ Address of property to be refinanced and purchase contract

☑ Homeowners' insurance information such as the agent’s name and contact information

☑ Bank statements and statements of assets

☑ Bankruptcy/ discharge papers (if applicable)

When refinancing your mortgage is not the best idea

Just because you can refinance doesn’t mean you should.

For starters, if your new interest rate isn’t at least 0.5 to 0.75 percentage points lower than your previous one, most experts argue it’s not worth it.

Refinancing also means new closing costs and other potential fees. If you won’t recoup those costs, it doesn’t make sense to refinance — even if you’re making a lower monthly payment. You should also reconsider a mortgage refinance if:

  • Your mortgage refinance rate won’t save you much in interest
  • Your credit score has taken a dive since your original mortgage
  • Your new minimum monthly payment will be out of your budget
  • You have plans to move out in the near future
Ads by Money. We may be compensated if you click this ad.AdAds by Money disclaimer
Solid credit? Now, let’s lower your mortgage payment.
Refinancing your home with Rocket Mortgage (NMLS #3030) at a competitive interest rate means you can pay it off quicker and even save some money. Sound good? We thought so.
View Options

Latest News on Mortgage Refinance

It’s important for homeowners who may be thinking about refinancing to consider the costs and weigh them against the potential benefits to determine if a refi is the right move.

Current mortgage rates are hovering around 7% and aren’t likely to significantly decrease over the next few weeks.

A rate and term refinance, which is typically done to either reduce the loan’s interest rate or shorten its term, may not make financial sense at the moment. However, home prices have appreciated significantly in the last five years, with some homeowners seeing a 50% gain in value. That gain represents a substantial increase in equity that could be tapped into through a home equity loan or line of credit and could provide some much-needed cash to pay for unexpected expenses.

If you are wondering if now is a good time to refinance your home loan, carefully consider the pros and cons before making a decision. There are several steps you can take to help you make the right choice.

Best Mortgage Refinance FAQs

What is refinancing?

chevron-down
chevron-up
When you refinance a mortgage, you replace your current loan with a new one with a different term length, interest rate or amount borrowed. Refinancing can help you save money on your mortgage by negotiating a lower interest rate or reducing the number of years you need to pay.

How often can you refinance your home?

chevron-down
chevron-up
There is no limit to how many times you can refinance your mortgage. However, the closing costs associated with refinancing can be expensive. Just because you can always refinance your home doesn't mean you should do so. Make sure to calculate your breakeven point.

How much does it cost to refinance a mortgage?

chevron-down
chevron-up
Closing cost to refinance a mortgage can cost around 2% to 6% of your loan amount. These costs include fees for the loan application, loan origination, home appraisal, and more. With a no-closing-cost refinance loan, these fees get rolled into the loan balance or interest rate.

Should I refinance my mortgage?

chevron-down
chevron-up
You should refinance your mortgage if you can lower your monthly payments, shorten your loan term or negotiate some other type of tangible benefit. A refinance could make sense if you can lower your interest rate by at least 0.50 percentage points. Before opting for a refi, make sure the new terms and payments won't put you in a financial bind.

Can I refinance my home with bad credit?

chevron-down
chevron-up
You can refinance your home even if you have bad credit, but it won't be easy. You will likely be offered a higher interest rate than someone with a better credit history. However, if you've managed to improve your credit score or accumulate a large amount of savings that can be used to reduce the size of the loan, the positives could outweigh the negatives.

When to refinance a mortgage?

chevron-down
chevron-up
The best time to refinance a mortgage is when interest rates are lower than when you locked in your rate and closed on your current mortgage. Refinancing when rates are lower will allow you to reduce your monthly payments. You may also refinance to a shorter term and pay more each month but save on interest over the life of the loan.

Who is the best mortgage refinance lender?

chevron-down
chevron-up
We chose Rocket Mortgage as the best overall mortgage refinance lender because of its consistently high customer satisfaction ratings — including being in the top three best mortgage servicers by J.D. Power for nine years running — as well as its web support and online application process.

How We Chose the Best Mortgage Refinance Companies

Our methodology considered:

  • Lenders that provide a quality customer experience with online tools, pre-approvals, discounts or exclusive refinance programs
  • Lender size, reputation and number of complaints
  • Consumer feedback and expert input

Summary of Money’s Best Mortgage Refinance Companies of June 2024