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Although interest rates aren’t as favorable as they were in recent years, refinancing might make sense for homeowners who want to pull out cash to renovate their homes. We’ve made it easier for you to compare refinance offers by reviewing dozens of mortgage lenders in several key areas. Based on those benchmarks, here is our guide to the best mortgage refinance lenders in 2023.
Best mortgage refinance companies
U.S. Bank
| Availability | All U.S. states |
| Loans offered | Conventional, jumbo, FHA, VA, USDA, fixed-rate, adjustable-rate; rate-and-term, cash-out and streamline refinancing; home equity line of credit (HELOC), home equity loan; construction and renovation loans; investment property; interest-only |
| Credit requirements | 620 for conventional loans; 740 for jumbo loans |
| Where to find | Online, in person or by phone |
Navy Federal Credit Union
Navy Federal Credit Union mortgage review
| Availability | All U.S. states |
| Loans offered | Conventional, jumbo, VA, Military Choice, Homebuyers Choice, fixed-rate, adjustable-rate, rate-and-term, cash-out and streamline refinancing; home equity line of credit (HELOC), home equity loan; investment property |
| Credit requirements | Undisclosed |
| Where to find | Online or in person |
NBKC Bank
| Availability | All U.S. states |
| Loans offered | Conventional, jumbo, FHA, VA, fixed-rate, adjustable-rate; rate-and-term, cash-out and streamline refinancing; home equity line of credit (HELOC), home equity loan; construction and renovation loans |
| Credit requirements | 620 for conventional loans; 680 for jumbo loans; 620 for FHA loans; 620 for VA loans |
| Where to find | Online |
SoFi
| Availability | All U.S. states except Hawaii (no refinances in New York) |
| Loans offered | Conventional, jumbo, fixed-rate, adjustable-rate; rate-and-term and cash-out refinancing; home equity loan; investment property |
| Credit requirements | 620 for conventional loans |
| Where to find | Online |
Valley National Bank
Valley National Bank mortgage review
| Availability | All U.S. states |
| Loans offered | Conventional, jumbo, FHA, VA, USDA, fixed-rate, adjustable-rate; rate-and-term and cash-out refinancing; home equity line of credit (HELOC), home staging line of credit; construction and renovation loans |
| Credit requirements | Undisclosed |
| Where to find | Online or at branches in four states |
What are the types of mortgage refinancing?
In general, there are two main types of mortgage refinancing:
- Rate-and-term refinancing: This type of refinancing replaces your current mortgage with a new loan that comes with a different interest rate, a different loan term or both.
- Cash-out refinancing: This type of refinancing enables you to tap the equity in your home (in the form of a lump sum given at closing) in addition to potentially lowering your rate.
How to choose the best refinance lender for you
To refinance your mortgage, you don’t need to go back to the bank or lender you initially worked with (more on that below). In fact, you could save yourself a bundle going somewhere else. It’s best to compare interest rates and closing costs from at least three refinance lenders, considering each lender’s credit score, equity and other requirements and how those might apply to your circumstances.
As you compare lenders, you might come across some that charge a flat fee for refinances. This could translate to more savings, depending on how much you’re borrowing and whether there are other fees.
Other lenders offer so-called “no closing cost” refinances that allow you to finance these fees with the new loan instead of paying them upfront. While this can be a nice perk if you don’t have the savings, you’ll pay a higher interest rate in exchange for it.
Steer clear of any lenders that push refinancing even if it isn’t financially advantageous for you. A reputable loan officer should help you do the math and decide whether refinancing makes sense for your situation.
Should you refinance with your current lender?
You aren’t required to refinance your mortgage with your current lender, and it’s smart to shop around for offers. However, there can be advantages to sticking with your current lender.
First, your lender might be willing to match or beat a lower rate quoted by another lender. Second, it’s often easier to refinance because the lender already has a lot of your financial information. Third, your lender might lower or waive certain refinance fees to keep you as a customer.
When is the best time to refinance your mortgage?
It can be a good time to consider refinancing your mortgage when interest rates drop below the level they were when you got your current loan — ideally one-half to three-quarters of a percentage point lower.
It can also be smart to refinance if your credit has improved and you can now qualify for a new loan with a lower interest rate.
Because refinancing involves closing costs, you also have to consider your breakeven point: the time when you can expect to recoup these costs based on how much you’ll be saving on your monthly payment. If you don’t plan to stay in your home long enough to break even, refinancing might not be the best route if your goal is to save money.
Ultimately, the right time to refinance your mortgage is when it makes the most financial sense for you. This will depend on several factors, including:
Why should you refinance your mortgage?
There are many good reasons to consider refinancing your mortgage, including the ability to:
- Capitalize on a lower interest rate, which can decrease your monthly mortgage payments and result in less interest paid over the life of your loan
- Shorten your loan’s term so that you can pay it off sooner, and pay less interest overall, or lengthen your loan’s term in order to lower your monthly payments
- Replace an adjustable-rate mortgage with a fixed-rate mortgage
- Cash out your home’s equity to fund home improvements, consolidate debt, finance an education or pay any other expense
- Remove mortgage insurance if your home’s value has increased
Requirements to refinance your mortgage
The process of refinancing your mortgage involves taking out a new loan — with or without additional cash from your equity — using that to pay off your existing mortgage, then restarting the repayment process with the new loan.
Because you’re getting a new loan, you’ll need to meet the lender’s qualifying criteria, which typically includes:
- Credit score – In order to refinance, you’ll need to meet credit score requirements just as you did with your first mortgage. The exceptions are FHA streamline refinancing and VA streamline refinancing (IRRRL), which don’t call for a credit check.
- Debt-to-income (DTI) ratio – Some lenders look for a debt-to-income (DTI) ratio of 50 percent or less, but many prefer no more than 36 percent to 43 percent. Your DTI ratio is your total monthly debt obligations divided by your gross monthly income.
- Equity – You should have a sufficient amount of equity in your home in order to refinance. Most lenders prefer you to have at least 20 percent.
- Seasoning – For most lenders, you’ll need to meet a “seasoning” requirement, as well, which is a period of time you need to wait before you can refinance. This is usually a minimum of six months since you last refinanced or purchased your home.
Methodology
To determine the best mortgage refinance lenders, Bankrate evaluated lenders based on several criteria, including cost (competitive refinance rates and low or no fees), loan processing times, scope of refinance offerings, borrower incentives and customer satisfaction.