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Best Mortgage Refinance Lenders of January 2021
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Refinancing your mortgage no longer has to be a hassle. We've done the research to identify the best mortgage refinance lenders to save you money. Our best mortgage refinance companies shortlist includes top picks that offer an array of valuable perks, including some with the best refinancing rates, no origination fees, low closing costs, and fast closing.
The Ascent's picks for the best mortgage refinance lenders of January 2021:
- Online-only application: Better.com
- Streamlined online process: Rocket Mortgage
- No lender fees and jumbo loans: Axos Bank Mortgage
- Diverse loan offerings and relationship discounts: Bank of America Mortgage
- Jumbo loans: SoFi Mortgage
- Refinance specialist: Loan Depot
Best for: Online-only application Better.com
Rating image, 5.0 out of 5 stars.
5.0 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Bottom Line
Has the right combination of features and perks, including no origination fees, low mortgage rates, and an online experience that helps homeowners cut their costs while saving time. Case in point, borrowers can secure preapproval in minutes. The lender also offers $150 off closing costs when applying through The Ascent site. Read Full Review
Min. Credit Score
- 580 (FHA)
- 620 (other mortgage products)
Min. Down Payment
- 3.5% (FHA)
- 3% (conventional loans)
Key Features
- No origination fees
- Instant loan estimates
- 100% online application
- $150 off closing costs for The Ascent readers
Loan Types
- Conventional
- FHA
- Jumbo
Fixed Rate Terms
- 30y, 20y, 15y
Adjustable Rate Terms
- 10/1, 7/1, 5/1
Best for: Streamlined online process Rocket Mortgage
Rating image, 5.0 out of 5 stars.
5.0 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Bottom Line
Led the transition to online-only applications and that seamless process is one reason which it has become the largest U.S. lender. Consistent JD Power customer service rankings make it hard to ignore. Read Full Review
Min. Credit Score
- 580 (FHA)
- 620 (other mortgage products)
Min. Down Payment
- 0%-3.5% (FHA & VA loans)
- 3% (conventional loans)
Key Features
- Online-only
- High allowable debt-to-income
- Low down payment options
Loan Types
- Conventional
- FHA
- VA
- Jumbo
Fixed Rate Terms
- Customizable (8y-30y)
Adjustable Rate Terms
- 10/1, 7/1, 5/1
Best for: No lender fees and jumbo loans Axos Bank Mortgage
Rating image, 5.0 out of 5 stars.
5.0 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Bottom Line
No lender fees for existing customers, along with a full online experience make it a top pick. One of the rare lenders to offer loans up to $25mm. Read Full Review
Min. Credit Score
- 580 (FHA)
- 620 (other mortgage products)
Min. Down Payment
- 3%
Key Features
- Lender fee waiver for existing customers
- Jumbo and super jumbo loans
- HELOC and home equity line of credit offerings
Loan Types
- Conventional
- FHA
- VA
- USDA
- Jumbo
- Interest Only
Fixed Rate Terms
- 30y, 20y, 15y, 10y
Adjustable Rate Terms
- 10/1, 7/1, 5/1, 3/1
Best for: Diverse loan offerings and relationship discounts Bank of America Mortgage
Rating image, 5.0 out of 5 stars.
5.0 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Bottom Line
Few lenders can match the lineup of loan products and terms. The high-tech digital experience compliments the banks extensive branch network. The interest rate and fee discounts for Preferred Rewards members define what relationship banking should look like. Read Full Review
Min. Credit Score
- 580 (FHA)
- 620 (other mortgage products)
- 640 (Affordable Loan Solution®)
Min. Down Payment
- 0%-3.5% (FHA, USDA loans, & VA loans)
- 3% (conventional loans)
Key Features
- Relationship interest rate and fee discounts
- Ability to apply entirely online
- No PMI offering
- Loans up to $5mm
Loan Types
- Conventional
- FHA
- VA
- Jumbo
- Interest Only
Fixed Rate Terms
- 30y, 20y, 15y
Adjustable Rate Terms
- 10/1, 7/1, 5/1
Best for: Jumbo loans SoFi Mortgage
Rating image, 4.5 out of 5 stars.
4.5 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Bottom Line
Fast prequalification, membership discounts, and a modern experience explain its top pick status. A potential fit for self-employed borrowers, based on SoFi’s nontraditional underwriting process that focuses less on credit history and more on income and assets. Read Full Review
Min. Credit Score
- N/A: Uses alternative data
Min. Down Payment
- 10%
Key Features
- Borrow up to $3mm
- No PMI offering
- $500 membership discount
- Fast prequalification
Loan Types
- Conventional
- Jumbo
Fixed Rate Terms
- 30y, 15y
Adjustable Rate Terms
- 7/1
Best for: Refinance specialist Loan Depot
Rating image, 4.5 out of 5 stars.
4.5 stars
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor.
Bottom Line
Among the most popular refinance and FHA/VA lenders in the market. Its Mello Smartloan platform eases the refinance process by digitally hooking up to confirm your assets, employment, and income. Read Full Review
Min. Credit Score
- 580 (FHA)
- 620 (other mortgage products)
Min. Down Payment
- 3.5%
Key Features
- Wide array of loan terms
- Branch network compliments online experience
- Refinance and FHA/VA specialist
Loan Types
- Conventional
- FHA
- VA
- Jumbo
Fixed Rate Terms
- 30y, 20y, 15y, 10y
Adjustable Rate Terms
- 10/1, 7/1, 5/1, 3/1
What is a mortgage refinance?
Refinancing a mortgage (or any other type of loan for that matter) refers to the process of obtaining a new loan -- typically with better terms -- for the purpose of replacing an existing one.
When it comes to mortgages, you can simply refinance your existing loan balance with one of our best refinance lenders. Or, if you have significant equity in the home, you could choose to get a new loan for a higher amount and get some cash in the process.
What is a good mortgage refinance rate?
The short answer is "it depends." Your refinancing rate depends on market conditions, your FICO® Score, and the loan-to-value ratio, or LTV ratio of your home. When refinancing with the best refinance companies, your goal should be to get an interest rate that is in-line with or better than the current market average for people with your credit score.
Benefits of refinancing
Refinancing your mortgage is a great way to access your home equity or change the financial circumstances around your mortgage. It can be a powerful weapon for a homeowner who's kept up with their mortgage payments.
You may want to refinance your mortgage if you're looking to:
- Reduce your monthly mortgage payment. If you're 10 years into a 30-year mortgage, you can refinance the remaining amount to spread those 20 years of payments across 30 years, lowering your monthly payment. This may also allow you to…
- Lock in a lower interest rate. Mortgage interest rates are still near historic lows, so a refinance, or refi, can be had for a pretty low rate. If you've had a mortgage for a while and have made your payments on time, a new lender may be willing to offer you a lower rate than what you're currently paying -- potentially saving you thousands of dollars. Even a small change can make a big difference, for example, you'll pay $8,353 more with a 4.2% rate than a 4% one on a 30-year mortgage for $250,000 from one of the top refinance lenders.
- Convert an adjustable-rate mortgage (or ARM) to a fixed-rate mortgage. ARMs are interest-rate sensitive, so they can start to get pretty expensive as interest rates increase. A refi is a great opportunity to lock in a fixed-rate mortgage for the remainder of your home loan, and now is a great time to get that done before the Federal Reserve increases rates.
- Tap home equity to pay for a large project (like an addition or a remodel). While a refi isn't the only way to get funds for a home-improvement project, it means you aren't paying service on extra debt (unlike, say, with a home-equity line of credit or a second mortgage) -- instead, you're just converting some of your equity to cash. This is known as a "cash-out refi."
Make sure you're refinancing with one of the best mortgage lenders for refinancing not just because you can, but because you need it to achieve your financial goals.
Are you looking to purchase or refinance a home?
Refinance risks
The main risk of refinancing is that it won't be as worthwhile as you think. We'll get into this a bit more in the next section, but a lower interest rate on your mortgage only makes sense if it saves you money relative to the cost of the loan itself.
It can also be risky if you're refinancing from an adjustable-rate mortgage to a fixed-rate loan, or vice versa. For example, let's say that you have a fixed-rate mortgage at 5% and you refinance to an adjustable-rate mortgage that has a 3% interest rate for five years, but then adjusts annually after that. If market interest rates spike, you can end up paying significantly more interest over time than you would if you had simply kept your existing mortgage.
Should you refinance?
The short answer is that refinancing isn't right for everyone, so it depends on your situation. It largely depends on how much it costs to refinance and how long you plan to stay in your home.
Refinancing your mortgage isn't free -- there will be some sort of lender fees and closing costs to worry about. If you plan to stay in your home long enough that you'll save more in interest than you pay to refinance, it can be a smart idea.
Here's a simplified example. Let's say that you can lower your monthly mortgage payment by $50 if you refinance, but it will cost you $2,000 in various fees to get the loan. Dividing $2,000 by $50 shows that you would need to stay in the home for at least 40 months for refinancing to be worthwhile.
FAQs
-
A mortgage refinance is the process of obtaining a new home loan for the purpose of replacing an existing loan.
-
A "good" mortgage refinance rate depends on the current market conditions, your credit history, and other factors your lender takes into account.
-
If refinancing helps you accomplish your financial goals or saves you money over the long run, it can be a smart idea. Just make sure that any fees you pay are justified by the benefits of refinancing.
About the Author
Matt is a Certified Financial Planner® and investment advisor based in Columbia, South Carolina. He writes personal finance and investment advice for The Ascent and its parent company The Motley Fool, with more than 4,500 published articles and a 2017 SABEW Best in Business award. Matt writes a weekly investment column ("Ask a Fool") that is syndicated in USA Today, and his work has been regularly featured on CNBC, Fox Business, MSN Money, and many other major outlets. He’s a graduate of the University of South Carolina and Nova Southeastern University, and holds a graduate certificate in financial planning from Florida State University.
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