5 Best Mortgage Refinance Lenders

by John Stapel

There are several reasons to consider refinancing your mortgage. You might be able to get a lower interest rate, which would lead to smaller monthly payments. You might also be able to use your home’s equity for a loan. Irrespective of your reasons for refinancing, the best mortgage refinance companies offer transparent pricing and terms, and have competitive rates.

The big factors for how much you might be able to save or get in your loan depend on the condition of the housing market and current interest rate, and the overall value of your house. But of course, it also helps to pick the right loan company.

The Most Important Factors For Mortgage Refinance Companies

The way mortgage refinancing works is that a lending company or bank will pay off your existing mortgage, and then give you a new loan. There’s two main reasons why people typically choose to refinance their mortgages.

The first reason is that it’s possible that interest rates, i.e. the money you pay back to your lender for the principal of your loan, might have dropped since you acquired your original mortgage. If that is the case, and at the moment the national interest rate is lower than it’s been in years, you might be able to shorten the amount of time you owe money, or lower your monthly payments. Keep in mind that for these lower interest rate loans, lenders typically look for a healthy credit score.

The second reason people tend to refinance their mortgage is so that they can use their home’s equity. This is what is typically called a Cash-Out Refinance, or a Home Equity Loan.

Here’s how it works. Let’s say your home is valued at $100,000, and you owe $60,000 on your remaining mortgage. That means the total equity that you can borrow against is $40,000. If you need money for a home repair or to start a business or some other reason, you can use that equity to get a low-interest loan of, potentially, up to $40,000. But different lenders will impose different limits on how much they will loan. And there’s a great deal of lenders that do not offer this service.

Keep in mind that as with a regular mortgage, refinancing typically comes with a closing cost, usually between 2% to 5% of the total mortgage. So talk with your lending agent to make sure a loan will make financial sense for your situation.

Quicken Loans – Most Flexible

Quicken is an online lender renowned for its ease of use and flexibility. You can apply completely online, and customer service is available until midnight EST. It takes longer than average for your loan deal to close, but the company offers flexible loan terms, and lower than average interest rates of 1.875% to 2.25%. You can buy discount points, which is a fee added to your closing costs, to lower your mortgage rate, and you can be pre-approved for a loan within 24 hours. Quicken does not offer Home equity loans.

  • Very flexible loan term periods, starting with an eight-year term, which is very low for the industry.
  • Extensive customer service hours, email, phone call, and online chat options are available until midnight, EST.
  • Lower than average interest rates.
  • Does not offer home equity loans.
  • It takes slower than average to close your loan, sometimes up to 47 days.
  • In-person customer service is limited to Charlotte, Cleveland, Detroit, and Phoenix.

Better – Most Convenient For Refinancing

The digital mortgage company Better is known for being quick and easy to use, with a completely online application process. If you are looking to refinance your home, or are at least curious and want to poke around and see what kind of rates you might be able to qualify for, Better is a good option.

The main drawback is that Better does not offer home equity loans. So if you are looking to borrow against your home for a low-interest rate, then Better is not for you.

  • Because Better doesn't charge commission or lender's fees, the average amount of their loans tends to be lower than the industry average.
  • Completely online application process.
  • Possible to get a loan rate quote within 20 minutes of applying.
  • Home equity loans are not available.
  • Required minimum credit score of 620, which might keep a loan out of reach for some people.
  • Not available in Hawaii, Massachusetts, Minnesota, Nevada, New Hampshire, Vermont, and Virginia.

Guild – Best For Low Credit Scores

Guild is a flexible option for lenders, as it offers both an online application process and in-person customer service, for people who still want real life interactions. The company doesn’t disclose its rates, and pre-approval takes longer than normal, sometimes up to three days. Conversely, it offers an Express 17-Day Closing Guarantee, if you are in a hurry to get a new loan sorted out.

Guild is willing to loan to people with lower than average credit scores. But like many online lenders, it does not offer home equity loans.

  • Available to people with a 600 credit score, which is lower than some lenders will accept.
  • Offers Express 17-Day Closing Guarantee.
  • Both in-person and online customer service is available.
  • Does not offer home equity loans.
  • Not available in New York or New Jersey.
  • Pre-approval can take up to three days, which is a bit on the high side.

SunTrust – Best Home Equity Loans

The Southern-based SunTrust is one of the largest bank chains in America, as well as one of the biggest lenders. It offers customizable loan rates, but only after you apply, which you can do in person or online.

SunTrust offers a Home equity line of credit between $10,000 to $500,000 and a 20-year repayment period. You can draw on this loan for up to 10 years. It’s one of the most generous and flexible programs available, but it is not available in all states.

  • Offers Home equity loans in many states.
  • Branches across the country.
  • Closing typically takes 30 to 35 days.
  • Home Equity loans are only available in California, Florida, Georgia, Tennessee, Alabama, South Carolina, Virginia, North Carolina, Maryland, Arkansas, West Virginia, Mississippi and Washington, D.C.
  • You can only learn what customizable loan rates and the various options are only available after you fill out your application.

BMO Harris Bank – Most Options

BMO Harris Bank is one of the largest lenders in the game, with hundreds of branches across the country. You can apply online or in person, and there’s no application fees and potentially a very low closing cost, if you qualify, though keep in mind they are looking for rather high credit scores, so this isn’t the right option for everyone.

But if you do qualify, then BMO Harris offers flexible Home equity loans and several options for you to consider. You can get an outright loan for up to $150,000 with 20 years terms, or open up a line of credit at a fixed rate for up to 20 years. The rate for this loan is on the high side of 4.24%, and you have to sign up for AutoPay to qualify for it.

  • Very flexible repayment terms, between 5 to 20 years, and loans up to $150,000.
  • Fixed-rate on home equity loans, so the amount won't go up as the market changes.
  • No application fees.
  • Minimum credit score of 700.
  • Fairly high APR rates for Home Equity Loans.

How We Found the Best Mortgage Refinance Companies

When searching for the best consolidation loans, we kept the following attributes in mind, first and foremost.

Credit Scores: With one exception made for high levels of flexibility, we aimed to find lenders who would work with people with solid but accessible credit scores in the 600 level.

Terms: We looked for lenders that offered flexible terms, in case you wanted lower payments over a longer period or wanted to pay off your loan quicker.

Down Payment: Down payment terms can fluctuate between 1% to 5%. We looked for companies that didn’t go much beyond the middle range.

Does It Cost Money To Get My Home Appraised?



In order to learn how much value your home has, and therefore how much you might be able to borrow against its equity, you will have to get your home appraised. Charlyne McWilliams, Senior Director at William Mills Agency, advises you to inquire about a "no-risk appraisal. That's where the lender pays the up-front cost for your appraisal," she says. "If it turns out you don't have enough home equity to refinance, the lender doesn't ask you to repay the cost of the appraisal."

Do I Have To Change Mortgage Companies To Refinance?



If you are comfortable working with the company that issues your original loan, but you want to see if you can get a better deal, you don't necessarily have to find a new lender. "It's always smart to contact your mortgage servicer. That's the company you send your payment to each month," says McWilliams. "Most have special deals for current customers because they want to keep your loan."

Are There Risks To Refinancing?



Yes, there are risks to using your home to secure a loan. If you are not able to make the payments, you are potentially risking foreclosure, so think long and hard if a loan makes sense for your long-term budget.

Do I Have To Get Private Mortgage Insurance?



If you borrow against more than 80% of your home's value, you will be required to pay for private mortgage insurance, which is usually around 0.55% to 2.25% of the annual loan amount.

Can Getting A Shorter Loan Term Save Me Money?



Every time you make a loan payment, you are paying off both the total principal of the loan, and the interest on the loan. If you are able to pay off your loan quicker with a shorter loan term, you will overall pay less interest and save money in the long run.