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Best Mortgage Refinance Lenders of March 2024

Review Updated
Matt Frankel, CFP®
By: Matt Frankel, CFP®

Our Mortgages Expert

Nathan Alderman
Check IconFact Checked Nathan Alderman
Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.

Mortgage refinancing companies and borrowers have been on a roller coaster ride the past few years, with interest rates hitting historical lows and highs.

Today's mortgage rates are still relatively high in comparison to those in the past, which might make now a poor time to refinance for some home buyers. But if you've decided refinancing is right for you, here's a shortlist of the best mortgage refinance lenders.

Award Icon 2024 Award Winner
Check Rates for Better

On Better's Secure Website.


Best for: Online-only application

Rating image, 4.5 out of 5 stars.
4.5/5 Circle with letter I in it. 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. 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.
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Bottom Line

Better has the right combination of features and perks, including no unnecessary fees, low mortgage rates, and a fast 100% application process. Better Mortgage does not charge lender fees such as those for origination, application, processing, and underwriting. As a result, Better states that new home buyers save $8,200 and customers who refinance save $8,200 over the life of their loans. In addition, Better states that applicants can get a personalized rate quote in under five seconds and a pre-approval in minutes. This can help homeowners cut their costs while saving time. The lender also offers $150 off closing costs when applying through The Ascent site.

Min. Credit Score

  • 620

Min. Down Payment

  • 3%

Key Features

  • One Day Mortgage. Lock a rate, get a Commitment Letter in 24 hrs. Terms apply.
  • Close 10-17 days faster than industry average
  • Apply 100% online, entirely on your schedule
  • $100 billion in online home loans
  • Better Price Guarantee: Better will match any valid competitor's offer, and credit you an extra $100. If Better can't, the $100 is yours to keep.

Loan Types

  • Conventional
  • FHA
  • Jumbo

Fixed Rate Terms

  • 10y, 20y, 30y

Adjustable Rate Terms

  • 10/6, 7/6, 5/6

Best for: Digital experience & down-payment assistance

Rating image, 4.0 out of 5 stars.
4.0/5 Circle with letter I in it. 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. 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.
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Bottom Line

Guaranteed Rate does a great job with ease of usability, offering comprehensive loan information during your research phase, plus the option to securely upload and digitally sign loan documents when you're ready to apply. The lender publishes its rates for their different loans online, making it easy to compare options.

Min. Credit Score 580 FHA 600 VA and FHA 620 Conventional

  • 550-680

Min. Down Payment

  • 3%

Key Features

  • Customer-friendly website
  • Technology to ease the process
  • Neighborhood data

Loan Types

  • Conventional
  • FHA
  • VA
  • USDA
  • Jumbo
  • Interest Only

Fixed Rate Terms

  • 30y, 15y

Adjustable Rate Terms

  • 5/1, 7/1 10/1
Award Icon 2024 Award Winner
Check Rates for Rocket Mortgage®

On Rocket Mortgage/Quicken Loans' Secure Website.


Best for: Streamlined online process

Rating image, 5.0 out of 5 stars.
5.0/5 Circle with letter I in it. 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. 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.
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Bottom Line

Rocket Mortgage, originally known as Quicken Loans, led the transition to a full digital experience and online-only applications. Its seamless process is one reason why it has become the largest U.S. lender. It is consistently ranked No. 1 on J.D. Power’s customer service rankings and has a robust and high-quality app that makes it easy to use.

Min. Credit Score 580 FHA 620 other mortgage products

  • 580 - 680

Min. Down Payment 0%-3.5% (FHA & VA loans) 3% (conventional loans)

  • 0% - 3.5%

Key Features

  • Online-only
  • High allowable debt-to-income
  • Low down payment options
  • Opportunities to get cash towards closing
  • High customer satisfaction ratings

Loan Types

  • Conventional
  • FHA
  • VA
  • Jumbo

Fixed Rate Terms

  • Customizable (8 -30 years)

Adjustable Rate Terms

  • 10/6, 7/6

Best for: Refinance specialist

Rating image, 4.5 out of 5 stars.
4.5/5 Circle with letter I in it. 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. 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.
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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. Its proprietary loan engines quickly determine the loan options that will give applicants the greatest potential cost and/or time savings based on the information it collects.

Min. Credit Score 580 FHA 620 other mortgage products

  • 580 - 620

Min. Down Payment

  • 0%-3.5%

Key Features

  • Digital loan technology
  • Branch network
  • Customer discounts

Loan Types

  • Conventional
  • FHA
  • VA
  • Jumbo

Fixed Rate Terms

  • 30y, 20y, 15y, 10y

Adjustable Rate Terms

  • 10/1, 7/1, 5/1, 3/1

Best for: No lender fees and jumbo loans

Rating image, 5.0 out of 5 stars.
5.0/5 Circle with letter I in it. 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. 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.
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Bottom Line

No lender fees for existing customers, along with a fully online experience make it a top pick. One of the rare lenders to offer jumbo loans up to $30 million. Axos also offers a mortgage with rewards, giving up to 3% cash back every year.

Min. Credit Score 580 FHA loans 620 other mortgage products

  • 620

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
  • Jumbo
  • Interest Only

Fixed Rate Terms

  • 30y, 20y, 15y, 10y

Adjustable Rate Terms

  • 10/6, 7/6, 5/6

Best for: Jumbo loans

Rating image, 4.0 out of 5 stars.
4.0/5 Circle with letter I in it. 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. 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.
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Bottom Line

SoFi has a complete digital mortgage and refinance application process. It offers fast prequalification, membership discounts, and a modern experience. A potential fit for self-employed borrowers, based on SoFi’s nontraditional underwriting process that focuses on a combination of credit history, income, and assets.

Min. Credit Score

600

Min. Down Payment

  • 3%-5%

Key Features

  • Named the Best Mortgage Lender for Saving Money in 2023 by CNBC Select
  • No cost, fully underwritten mortgage pre-approval letters
  • Extended rate lock option allows to you lock in today’s rate for more than 90 days
  • Our on-time close guarantee offer is backed by $5,000
  • A dedicated mortgage loan officer to help you through the process

Loan Types

  • Conventional
  • FHA
  • VA
  • Jumbo

Fixed Rate Terms

  • 30y, 20y, 15y, 10y

Adjustable Rate Terms

  • 10/6, 7/6, 5/6

Best for: Diverse loan offerings and relationship discounts

Rating image, 5.0 out of 5 stars.
5.0/5 Circle with letter I in it. 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. 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.
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Bottom Line

Bank of America is one of the largest banks in the U.S., offering a wide variety of financial products in addition to its mortgages. Few lenders can match the lineup of loan products and terms. Bank of America offers a Preferred Rewards program for borrowers who have bank accounts at the bank and investment accounts at Merrill. Borrowers can qualify for an origination fee or interest rate reduction based on their eligible tier at the time of application.

Min. Credit Score 620 FHA 620 Other mortgage products 640 Affordable Loan Solution® 680 Jumbo Loans

  • 620

Min. Down Payment 0% VA loans 3.5% FHA 3% Conventional loans, Affordable Loan Solution® mortgage, Freddie Mac Home Possible® mortgage 5% Other loans

  • 0%-3%

Key Features

  • Wide range of financial products
  • Preferred Rewards program
  • Ability to apply entirely online
  • No PMI offering
  • Loans up to $5 million

Loan Types

  • Conventional
  • FHA
  • VA
  • Jumbo

Fixed Rate Terms

  • 30y, 20y, 15y

Adjustable Rate Terms

  • 10/6, 7/6, 5/6

Best for: Diverse offerings and homebuyers building credit

Rating image, 4.5 out of 5 stars.
4.5/5 Circle with letter I in it. 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. 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.
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Bottom Line

New American Funding is one of the largest privately owned direct mortgage lenders in the country. The lender offers competitive rates and a wide variety of loans and customizable loan terms. The lender also has a highly efficient lending process that allows for quicker closing times. What's more, New American can be a good solution for people building credit and wanting a good mortgage. It focuses on lending to underserved communities.

Min. Credit Score 580 FHA 620 other mortgage products

  • 580 - 620

Min. Down Payment 0%-3.5% (FHA and VA loans) 3% (conventional loans)

  • 0% - 3.5%

Key Features

  • Fast service
  • One of the top lenders to Hispanic and Black borrowers.
  • Offer customizable loans, including home addition loans
  • High customer satisfaction, A+ BBB rating

Loan Types

  • Conventional
  • FHA
  • VA
  • USDA
  • Jumbo
  • Interest Only
  • Reverse

Fixed Rate Terms

  • Customizable (8 - 30 years)

Adjustable Rate Terms

  • 10/1, 7/1, 5/1

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 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 refinance loan for a higher amount and get some cash in the process.

Why should I refinance with one of the best mortgage lenders?

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.

In fact, you might not even have to leave your house or pick up a phone to complete the entire refinancing process! Some of our favorite mortgage companies that offer refinance loans have streamlined the process, and you might be able to refinance your mortgage entirely online.

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 loan, you can refinance the remaining amount to spread those 20 years of payments across a 30-year loan term, lowering your monthly payment.
  • Lock in a lower interest rate. Mortgage interest rates have fallen a little from their 2022 highs, so some homeowners can lower their interest rates by refinancing. 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 $23,400 more with a 6.25% rate than a 6% one on a $400,000 30-year mortgage over the term of the loan. Even if market interest rates haven't moved much, you may be able to get a lower rate if your credit score has improved significantly since you obtained your current mortgage.
  • Convert an adjustable-rate mortgage (or ARM) to a fixed rate mortgage. Adjustable-rate mortgages are interest-rate sensitive, so they can start to get pretty expensive as interest rates increase. A refinance is a great opportunity to lock in a fixed-rate mortgage for the remainder of your home loan, and can be an especially good idea when interest rates fall. For more on refinancing from an ARM to a fixed-rate mortgage, check out our guide.
  • Get rid of mortgage insurance. If you originally put less than 20% down or used an FHA loan, you probably had to add mortgage insurance to your loan. If your home is now worth significantly more than you paid for it, refinancing could allow you to drop mortgage insurance and lower your payment, even if interest rates haven't fallen much.
  • Tap home equity to pay for a large project (like an addition or a remodel). While a refinance isn't the only way to get funds for a home improvement project, it means you aren't taking on additional 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 by refinancing with a higher loan amount than your current mortgage balance. This is known as a cash-out refi.

Make sure you're refinancing with one of the best refinancing lenders not just because you can, but because you need it to achieve your financial goals.

TIP

Check it out

If you would like to learn about some of the major players in the mortgage industry, check out The Ascent's research piece on the largest mortgage lenders.

What are the risks of refinancing?

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 you have a fixed-rate mortgage at a 7% APR and you refinance to an adjustable-rate mortgage that has a 5% APR for five years, but then adjusts annually after that. If interest rates spike, you can end up paying significantly more interest over time than you would if you had simply kept your existing mortgage.

What is a good 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 a similar credit score.

How much could you save by refinancing?
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Should you refinance?

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.

One common misconception is that refinancing is free or that it costs the same with every lender. And this isn't the case at all -- borrowers should expect closing costs in the thousands when refinancing. To be sure, paying the closing costs can still be well worth it if you're planning to stay in your home long enough so that the savings outweigh the cost.

Here's an 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.

To determine if refinancing is the right decision for you, check out our guide on whether or not refinancing is worth it.

Lender Best For Next Steps
Award Icon 2024 Award Winner
Graphic of Better
Better
Rating image, 4.5 out of 5 stars.
4.5/5 Circle with letter I in it. 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. 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.
= Best
= Excellent
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= Poor
Rating image, 4.5 out of 5 stars.
4.5/5 Circle with letter I in it. 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. 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.
= Best
= Excellent
= Good
= Fair
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Best For

Online-only application

Check Rates for Better

On Better's Secure Website.

Graphic of Guaranteed Rate Mortgage
Rating image, 4.0 out of 5 stars.
4.0/5 Circle with letter I in it. 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. 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.
= Best
= Excellent
= Good
= Fair
= Poor
Rating image, 4.0 out of 5 stars.
4.0/5 Circle with letter I in it. 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. 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.
= Best
= Excellent
= Good
= Fair
= Poor
Best For

Digital experience & down-payment assistance

Award Icon 2024 Award Winner
Graphic of Rocket Mortgage®
Rocket Mortgage®
Rating image, 5.0 out of 5 stars.
5.0/5 Circle with letter I in it. 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. 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.
= Best
= Excellent
= Good
= Fair
= Poor
Rating image, 5.0 out of 5 stars.
5.0/5 Circle with letter I in it. 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. 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.
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Best For

Streamlined online process

Check Rates for Rocket Mortgage®

On Rocket Mortgage/Quicken Loans' Secure Website.

Graphic of loanDepot
Rating image, 4.5 out of 5 stars.
4.5/5 Circle with letter I in it. 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. 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.
= Best
= Excellent
= Good
= Fair
= Poor
Rating image, 4.5 out of 5 stars.
4.5/5 Circle with letter I in it. 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. 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.
= Best
= Excellent
= Good
= Fair
= Poor
Best For

Refinance specialist

Graphic of Axos Bank Mortgage
Rating image, 5.0 out of 5 stars.
5.0/5 Circle with letter I in it. 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. 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.
= Best
= Excellent
= Good
= Fair
= Poor
Rating image, 5.0 out of 5 stars.
5.0/5 Circle with letter I in it. 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. 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.
= Best
= Excellent
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Best For

No lender fees and jumbo loans

Graphic of SoFi Mortgage
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4.0/5 Circle with letter I in it. 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. 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.
= Best
= Excellent
= Good
= Fair
= Poor
Rating image, 4.0 out of 5 stars.
4.0/5 Circle with letter I in it. 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. 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.
= Best
= Excellent
= Good
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Best For

Jumbo loans

Graphic of Bank of America Mortgage
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5.0/5 Circle with letter I in it. 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. 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.
= Best
= Excellent
= Good
= Fair
= Poor
Rating image, 5.0 out of 5 stars.
5.0/5 Circle with letter I in it. 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. 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.
= Best
= Excellent
= Good
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Best For

Diverse loan offerings and relationship discounts

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4.5/5 Circle with letter I in it. 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. 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.
= Best
= Excellent
= Good
= Fair
= Poor
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4.5/5 Circle with letter I in it. 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. 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.
= Best
= Excellent
= Good
= Fair
= Poor
Best For

Diverse offerings and homebuyers building credit

Ask the experts

Scott Deacle

Scott Deacle

Associate Professor of Business and Economics and Department Chair at Ursinus College

When should someone consider refinancing their mortgage?

You should consider refinancing when you can obtain an interest rate that is substantially lower than the one you are paying. You want to refinance if you expect to save more from lower interest payments than the fees you pay for the refinancing. This requires you to estimate how long you will stay in your home. If you plan to move soon, then you won't be paying lower interest for long, so you won't offset the refinancing fees. But if you plan to stay in your house for a long time, then you will save more in interest over time than you pay for the refinancing. There are free refinance calculators on the web that can help you figure out how long it will take to offset the refinancing fee.

A second reason to refinance is if your income has increased and you can afford a larger payment. If so, you might benefit from refinancing from a longer-term mortgage (say, 30 years) to a shorter-term mortgage (say, 10 years). With the shorter-term mortgage, you have higher payments, but the interest that you pay over the life of the loan will be much lower.

A third reason is that your credit-worthiness has improved. This can happen if your credit score improves, your income dramatically increases, or your home increases substantially in value. You can lower your rate substantially and get better terms in these scenarios.

How often should someone refinance their mortgage?

It depends on interest rates. There's usually no reason to refinance when interest rates are rising. But if they are falling, as they generally have since 2007, it might make sense to refinance every three or four years, depending on the size of your loan and its time to maturity. You need to check the calculators to see how much you can save and then determine if you will remain in your home long enough to offset the refinancing fees.

A pitfall that is easy to overlook is that you can unwittingly end up paying far more interest if you continually refinance mortgages, even though you've lowered monthly payments. Consider someone who refinances his or her mortgage every three years and gets a new 30-year mortgage each time. After the third refinancing, that person has much lower payments. But that person also has 30 years left on the mortgage and could end up taking 39 years to be free of debt on their house. The extra nine years of payments mean nine more years of interest. At some point, the borrower should pay more than the minimum monthly payments -- to speed the retirement of the debt and reduce total interest payments -- or refinance into a short-term mortgage.

What are some tips for people wondering how to refinance their mortgage?

It's very easy to apply for a refinance. Many lenders have easy web-based refinancing sites. You should certainly obtain multiple quotes. Check out the big national lenders, but also check out local lenders and the bank or credit union at which you have a checking account. They may give you a better deal if you are an existing customer. Make use of calculators to help you compare rates and to study the impact of "points" on your overall costs.

Before applying to refinance, take advantage of your guaranteed-by-law free credit report to make sure your credit history is accurate. Your credit score plays an important role in determining your interest rate.

In addition, mortgage lenders often encourage refinancing customers to borrow to pay their refinancing fee. Be careful. This adds to your overall debt burden and increases the interest you will pay over the life of the loan. Ideally, you will pay the refinance fee from your savings so you don't increase the principal on your mortgage.

Michael Manahan

Michael Manahan

Lecturer at California State University Dominguez Hills, Author and Consultant

When should someone consider refinancing their mortgage?

The simple answer is whenever the savings in interest rates reasonably offset the closing costs of a new mortgage. However, there are other reasons to refinance even if you cannot get a better interest rate. If you have a variable rate on your mortgage, your mortgage payment may go up if interest rates rise. Refinancing with a fixed-rate mortgage will eliminate this risk. If you have paid off some of your mortgage, refinancing should reduce your monthly payment and leave more cash for vacations or living expenses. This option is a good option for someone whose income is not expected to increase (people living on some sort of fixed income). Finally, if you have equity in your home, you could refinance and take out cash for home improvements or investments, such as buying a rental property.

How often should someone refinance their mortgage?

You should refinance your mortgage when rates fall below the rate you are paying, but what if rates keep falling? Should you keep refinancing? That is not an easy question to answer because when you refinance you may get a better interest rate, but refinancing costs money. There are appraisal fees, closing costs, title fees, escrow fees, and sometimes points. All these charges can add up to thousands of dollars. Also, when you refinance there is a good chance your credit score will drop, as "new credit" and "credit inquiries" are two things that negatively affect your credit score. If you need credit for anything else, such as a car loan, bathroom or kitchen remodel, or anything else that is paid with consumer credit, you may find you will be charged a higher rate of interest on those loans. Also, when you do refinance the underwriter wants to see your previous loan "seasoned" which means you have made the payments on time for a certain period. Depending on the underwriter, that could be anywhere from six to 12 months. If you apply to refinance too soon, you may not get as good of an interest rate as you hoped.

What are some tips for people wondering how to refinance their mortgage?

I have refinanced properties with dozens of lenders and mortgage brokers over the years. I'd love to tell you there is some secret to make applying for and getting a mortgage easier. If there is, I haven't found it. But to the degree you can make it a little easier, there are some things you can do. First, have your paperwork ready. The lender is going to want tax returns, pay stubs, bank statements, 401(k) account statements, mortgage statements, brokerage account statements, and possibly more. Download electronic copies of all these documents so when asked, you can quickly upload them or email them to the lender. Second, check your credit report. The lender will want you to explain any negative aspect of your credit report and any credit inquiry that has been made recently. Third, when choosing to use a lender or mortgage broker, don't be fooled by all the low interest rate ads. The interest rate you are going to pay is based on the underwriter's assessment of your risk. I have an excellent credit score, excellent credit history, low amount of debt, good income, and reasonably high net worth. Yet I've never been able to get those rates they advertise. Finally, think about your style. Are you okay doing everything online and talking to whoever in the call center answers the phone or do you want a specific person handling your transaction whom you can reach out to with questions or to help you through the process?

Clifford Rossi

Clifford Rossi

Executive-in-Residence and Professor of the Practice at the Robert H. Smith School of Business at the University of Maryland

When should someone consider refinancing their mortgage?

You should keep an eye on the level and possible direction of interest rates over time and compare that with the rate on your existing mortgage to see if there's a benefit from refinancing. Technically, when prevailing rates fall below your existing mortgage rate you may have an opportunity to effectively swap out your old mortgage with a new one at a lower rate. We call that a rate-and-term refinance. But you need to be mindful of the overall cost of refinancing to ensure you are truly getting an all-in lower rate. Specifically, pay attention to how many points and fees you are being asked to pay upfront if any, as that can reduce the benefit you'll get from just the lower rate.

You may also find that in some cases refinancing for a home renovation project might be a good idea if you have experienced a significant increase in the equity stake of your home which many homeowners have seen in the recent run up in home prices. We call this a cash-out refinance. That is, you can replace your existing home mortgage with a new one and actually take cash out of the property for improvements and the like. But these cash-out refinances can be risky so make sure to understand what the impact on your new mortgage payment and payment terms are before taking out such a refinance option.

Lastly, these days there's a better than ever chance that interest rates will rise than fall going forward so borrowers that currently have very low adjustable-rate mortgages (ARMs) may want to consider switching out at some point into a fixed-rate loan if they believe they will be in the home for some time in order to lock in a relatively low mortgage rate now as a hedge against potential future rate increases.

How often should someone refinance their mortgage?

It really depends on things like market conditions. For example, many years ago, mortgage rates were in a period of steady decline such that I had friends going through multiple refinances in a single year as many lenders were offering no-closing-cost refinances which meant that the borrower did not incur any costs for the new loan. Even when rates fell by as little as 25 basis points (0.25%) under those circumstances borrowers were incentivized to refinance. With more lenders offering electronic loan applications, the process to apply for a loan refinance has become more efficient, thus providing borrowers with potentially greater opportunities to act when rate conditions are favorable. Overall, there are no rules on how often one can refinance and certainly as long as the borrower continues to pay the mortgage as agreed it should not detrimentally affect their credit profile for a standard rate-and-term refinance.

What are some tips for people wondering how to refinance their mortgage?

The internet has substantially changed things for the better for borrowers compared to years ago. Now you can go to any of several websites that provide current mortgage rates, including Freddie Mac's Primary Mortgage Market Survey (PMMS), to get a sense of where mortgage rates for various products are. Once you determine whether current rates are lower than the rate you have now, then shop around with several lenders to see what you can get in terms of both rate and fees they will charge. Pay particular attention to those fees and points and make sure you get in writing exactly what the new loan terms and costs will be. Lenders must provide that to you.

Brian Adams

Brian Adams

Associate Dean of Graduate Programs, Pamplin School of Business at the University of Portland

When should someone consider refinancing their mortgage?

Refinancing makes sense when the reduction in monthly mortgage payment (due to lower interest rates) is greater than the cost of refinancing the loan. The important variable here is the length of time you expect to remain in the home. Usually you would need to stay in the home for at least another three to five years for the reduction in loan payments to offset the refi fees.

Refinancing may also make sense if the homeowner can use the accrued equity in the house to reinvest in the house for maintenance and upgrades. Usually kitchen and bathroom remodels will add value to the home for the current homeowners when they sell.

How often should someone refinance their mortgage?

How often someone should refinance is up to them. If rates continue to decline and/or the homeowner can use the equity in the home to improve the value of the property, then there may be multiple opportunities to refinance.

What are some tips for people wondering how to refinance a mortgage?

When you are looking to refinance remember to negotiate fees as well as rate.

Chester S. Spatt

Chester S. Spatt

Professor of finance at Carnegie Mellon University's Tepper School of Business

When should someone consider refinancing their mortgage?

Refinancing is a forward-looking decision -- people should consider whether there would be sufficient potential savings in interest rates (enough of a drop in interest rates) over the remaining term of the existing loan, for example. The issue is whether interest rates have fallen sufficiently such that it is worth incurring the out-of-pocket costs and the reduction in the value of the prepayment option on the new loan compared to the old one.

How often should someone refinance their mortgage?

It is not a question of the frequency of refinancing, but whether interest rates have fallen sufficiently such that it is worth incurring the out-of-pocket costs and the reduction in the value of the prepayment option on the new loan.

What are some tips for people wondering how to refinance their mortgage?

The type of mortgage that makes sense going forward would depend upon how long the individual anticipated remaining in the property. Whether it makes sense to refinance depends upon the extent to which interest rates have declined.

FAQs

  • A mortgage refinance is the process of obtaining a new home loan for the purpose of replacing an existing loan.

    • Reduce your monthly mortgage payment
    • Lock in a lower interest rate
    • Convert an adjustable-rate mortgage (or ARM) to a fixed-rate mortgage
    • Tap home equity to pay for a large project (like an addition or a remodel)
    • To get rid of mortgage insurance if your home has increased in value
  • 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.

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