Top Mortgage Refinance Lenders: 2024 Reviews & Comparisons

Refinancing your mortgage can be a smart financial move if you do it the right way. You can tap into your home equity, get a lower interest rate, or even shorten or lengthen the terms of your loan. All of these are great outcomes for you and your wallet.

But here’s something that’s not so great: Picking the wrong mortgage refinance lender.

This one major mistake can potentially cost you tons of money in closing costs, hidden fees, and high interest rates.

You can avoid that by learning just a bit about what to expect throughout the refinance process and how to find the right lender. We’ll walk you through everything you need to know and give you some suggestions for the big decision.

The 10 Best Mortgage Refinance Lenders of 2022

We’ve compiled a list of the best mortgage refinance companies with the most competitive mortgage rates. Read through our short reviews to understand what kind of mortgage products they offer and how their process works. It’s an excellent resource for narrowing down your list of refinance lenders to consider.

How to Choose a Lender to Refinance Your Mortgage

When you decide to refinance, picking the right lender is vital to your financial success.

Different mortgage refinance lenders structure loans in different ways, whether you want to minimize the cash you need to close or want to lower your monthly payments — or a combination of the two.

The first thing to look at is what kind of refinance loans the lender offers. For example, if you’re looking for a government-backed refinance with lower minimum credit score requirements than a conventional loan, look for a lender offering FHA refinance loans.

Loan Terms

Alternatively, you may want to refinance into a shorter term than the standard 30-year fixed mortgage. Look for mortgage refinance companies that offer multiple options, such as 10, 15, or 20-year mortgages, so you can compare refinance rates and payments and pick the best one.

As with any kind of loan, you also want to shop around for mortgage rates. Not every lender automatically offers the same interest rate or APR. You’ll also want to compare closing costs as part of the evaluation process. You need to know both your upfront costs and long-term costs in terms of interest.

Closing Costs

Another question to ask is whether a lender can roll your closing costs into the loan itself if you want to minimize the amount of cash you want to bring to the table.

There are numerous ways you can tackle mortgage refinancing. That’s why picking the right refinance lender can make a huge difference. They can help you understand the pros and cons of different options, so you can make the right choice.

Don’t be afraid to ask questions, ask for specific numbers, and talk to a few different lenders to get an idea of their recommendations and refinance process.

When to Refinance a Mortgage

Now that you know some of the best refinance lenders out there, make sure you’re refinancing for the right reasons. Here are some of the most common reasons for refinancing a mortgage.

Lower Your Monthly Payments

It’s entirely possible to refinance to lower your payment amount. To save money over the life of your loan, you could refinance into a lower interest rate if mortgage rates have dropped since you got your loan. Or, if your credit score has improved, you might be able to qualify for a lower refinance rate as well.

If you’re having trouble making your payments, you could also consider refinancing into a longer loan term, which spreads out your existing mortgage amount over more years.

So if you’ve been paying your mortgage for 10-year on a 30-year loan, you could stretch out the existing 20 years over another 30-year period. But, of course, this should be done under caution, depending on how much financial trouble you’re in and what kind of retirement plans you have.

Cash Out Your Home Equity

If you have equity in your home—at least 20%—you could potentially qualify for a cash-out refinance. This allows you to get a lump sum of money and then add that amount to your existing loan. Usually, you can borrow up to 80% of your equity.

Let’s take a look at an example.

Say your home is valued at $200,000, and your mortgage is down to $150,000. That leaves you with $50,000 in equity. The bank will let you borrow up to 80% of that, which is $40,000.

If you qualify for the mortgage, you could then refinance a total of $190,000. Then you can use the cash as you see fit, whether it’s for a home renovation, college tuition, medical bills, high-interest debt, or any other major expense.

Change the Terms

Shorter loan terms usually come with lower mortgage rates since there’s less of a chance for you to default on the loan. While monthly payments are generally much higher with a 15-year mortgage than a 30-year mortgage, you may save on interest by switching once you’ve paid off a part of your current mortgage.

If, for example, you’re 15 years into a 30-year fixed mortgage, you only have 15 years left to pay. So you could potentially save thousands by getting a lower interest rate via an actual 15-year fixed mortgage.

Switch to a Fixed Rate Mortgage

If you initially took out an adjustable-rate mortgage (or ARM) and your fixed period is ending, you should consider refinancing your loan. While there’s a cap on how high your adjustable mortgage can go, it could potentially be much higher than current fixed interest rates.

Talk to a lender to see the best option to avoid a significant jump in your monthly payment. And be sure to plan ahead since it can take time for the approval process to finish.

How does refinancing a mortgage work?

Applying for a refinance is very similar to applying for a home loan. It’s also important to note that you don’t have to use your current lender or servicer. You can pick any mortgage lender that you’d like for your refinance.

After shopping around for lenders and comparing your loan options, you’ll have to complete a formal application. This involves submitting your income and financial statements. The loan officer and underwriter will review your materials to make sure you can afford the new terms.

Mortgage Refinance Requirements

Mortgage refinance lenders are primarily concerned with three things: credit score, debt-to-income ratio, and average loan-to-value ratio (LTV).

• Credit score: The minimum credit score for most mortgage refinance companies is around 620.
• Debt-to-income ratio: Just like a regular home mortgage, they want to make sure your monthly debt doesn’t exceed 43% of your monthly take-home pay. In addition to personal loans and credit card debt, they also include your new mortgage payment in that number.
• Loan-to-value ratio (LTV): Lenders would like to see a low loan-to-value ratio (LTV). Typically, you should have at least a 20 percent equity in your home. In addition to personal loans and credit card debt, they also include your new mortgage payment in that number.

You’ll be required to get an appraisal of your home as part of the process. This makes sure the property lives up to its estimated value and helps determine your total equity in the home. You don’t need to do anything special before the appraiser arrives, but it is good to clean and tidy up to make a good impression.

After that, you just have to wait for closing. Usually, your lender lets you pick the date, time, and location. Next, they’ll send a notary who will walk you through signing the closing documents. Then, you’ll start fresh with your new payment schedule. If you cashed out on any home equity, you can typically either receive a check or have it deposited directly into your bank account.

When Not to Refinance

When shouldn’t you refinance? If your credit score has dropped significantly since you took out your original mortgage, you may be surprised by higher interest rates. Similarly, if you originally qualified for a rock-bottom interest rate during the recession, you may not save money with today’s refinance rates.

Also, consider that every mortgage refinance comes with closing costs, just like your initial home loan. Therefore, you need to make sure any financial benefits you expect to receive from your refinance outweigh the added closing costs.

A suitable lender can walk you through all of these considerations, whether it’s in person, on the phone, or through online resources. Do the research it takes to make sure you’re making an intelligent decision on your next home refinance.