Best Lenders for Refinancing Your Mortgage
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With mortgage interest rates high – above 7% on average for a 30-year, fixed-rate mortgage in early October, according to Freddie Mac – you might not be thinking much about refinancing your mortgage. After all, most refinances aim to end up with a lower interest rate on your new home loan. That’s not an easy task today, with interest rates as high as they are.
But there are other reasons to refinance your mortgage. Maybe you want a lower monthly payment. You might refinance from a shorter-term mortgage loan, such as a 15-year, fixed-rate mortgage, to one with a longer term, such as a 30-year loan. Stretching out how many months you have to repay your loan will leave you with a smaller monthly payment.
Or maybe you want to reduce the interest you pay on your mortgage. You can do this by refinancing from a longer-term loan to one with a shorter term. Shorter-term mortgages, such as 10-year or 15-year loans, charge lower interest rates. You’ll also pay far less interest if you pay off a shorter-term mortgage in full than if you held a longer-term mortgage for its full 20 or 30 years.
Finally, you might be interested in a cash-out refinance, which you refinance to a new loan with a higher amount than what you owe on your current mortgage. You can then use the extra cash for whatever you’d like. Maybe you owe $200,000 on your mortgage. If you refinance to a new loan of $280,000, you’d get that extra $80,000 in a lump sum that you can use for home repairs, paying off high-interest-rate credit card debt, or any other way you’d like to spend it.
Considering a refinance this year? Here are some of the best lenders providing these loans. Just note that most lenders don’t provide average amounts for the closing costs they charge. These costs will vary depending on the size of the loan you take out.
Overview of the best lenders for a mortgage refinance
Lender | Best for |
Ally Home | No lender fees |
PNC Bank | That big-bank experience |
Rocket Mortgage | Online applications |
Discover Home Loans | Refinancing smaller amounts |
PenFed Credit Union | A personal touch |
Chase | Plenty of options |
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Best lenders for a mortgage refinance
Ally Home
Refinancing a mortgage loan can be expensive. Lenders' closing costs in a refinance vary but typically range from 2% to 6% of the amount you are refinancing. If you are refinancing a mortgage of $250,000, you can expect to pay from $5,000 to $15,000. But if you refinance with Ally Home? You’ll pay less because this lender charges no lender fees.
What does that mean? Ally Home won't charge origination, application, processing, or underwriting fees, which can save you thousands of dollars. This doesn't mean that an Ally Home refinance is free. You might still have to pay for an appraisal to determine the market value of your home, and you might also have to pay for fees charged by third-party providers such as a title insurance company or real estate attorney. The lack of lender fees, though, will reduce your refinance costs.
Ally earns points, too, for speed. According to Ally, you can apply for a refinance online in as little as 15 minutes by completing the lender's question-and-answer application. You can also submit documents – such as the paycheck stubs, bank statements, and tax returns you'll need to verify your income – online at Ally.com.
Your interest rate for your new loan will depend on your credit score and the type of loan you take out. But as of mid-October, Ally said that the average interest rate for a refinance loan of $350,000 for a single-family home in Florida was 7.75% for a 30-year, fixed-rate loan and 7.625% for a 15-year, fixed-rate loan.
Ally says every refinance is different but usually takes a few weeks to a few months to close a home loan with the bank.
- Where to apply: Ally Home
- States in which Ally lends: Ally offers mortgages in all 50 states.
PNC Bank
Looking for a major lender that operates physical locations in all 50 states? PNC Bank might be the right choice. This national lender can provide you with access to a real-live loan officer no matter in which U.S. state you reside.
PNC Bank also offers a full range of refinance loans: fixed-rate loans in which your interest rate will never change; adjustable-rate mortgages in which your rate will stay fixed for a set number of years and then rise or fall typically once a year afterward; and jumbo loans if you need to refinance a larger amount of money. PNC also offers refinance loans insured by the Federal Housing Administration and the U.S. Department of Veterans Affairs.
You'll also have options when it comes to terms. For fixed-rate loans, you can refinance up to $726,200 for a single-family home with loan terms ranging from 10 to 30 years. With an adjustable-rate mortgage, you can choose from a fixed period – the number of years in which your interest rate doesn't change – of seven to 10 years. And with a jumbo loan, you can refinance up to $5 million with terms ranging from 15 to 30 years.
PNC does charge origination fees, which will vary. As of mid-October, PNC says that its average interest rate for a 30-year fixed-rate loan is about 7.75%, while it is 6.875% for a 15-year fixed-rate loan.
PNC doesn't list a minimum FICO credit score to qualify for a refinance but does say that most successful applicants have average or better credit. PNC also says that most successful applicants have a debt-to-income rate of 43% or lower. This ratio measures the percentage of your gross monthly income that your monthly debts, including your estimated new mortgage payment, will take up. If your monthly debts eat up 43% or less of your gross monthly income, you'll have a better chance to qualify for a PNC refinance.
- Where to apply: PNC Bank
- States in which PNC Bank lends: As a major national bank, PNC Bank lends in all 50 states.
Rocket Mortgage
Want to apply for a refinance without ever speaking to a loan officer in person or even over the phone? Rocket Mortgage – formerly known as Quicken Loans – might be your best choice.
Rocket Mortgage says you can apply online for a refinance in minutes. And if all goes well, you can complete the entire refinance process online without ever having to meet or speak with your loan officer. You will have an assigned loan officer, but you’ll typically communicate with that person online. Rocket Mortgage does say that you might have to speak to a loan officer by phone on rare occasions.
Rocket Mortgage is a national lender, too, meaning it has a far reach, originating loans in all 50 states plus the District of Columbia. It also offers loans with various terms, including traditional 15-year or 30-year mortgages. But you can also create what Rocket Mortgage calls a customizable mortgage with a term ranging from eight to 29 years.
Rocket Mortgage doesn’t say how much you’ll pay in closing costs, though it does estimate that most borrowers will pay from 3% to 6% of their loan amount. With a refinance, Rocket Mortgage will usually be able to roll your closing costs into your loan amount so that you won’t have to pay these fees upfront. For example, if you are refinancing to a $250,000 mortgage and your closing costs are $7,500, you’d end up with a total loan of $257,500 that you’d pay back in regular monthly payments with interest.
There are some limits to qualifying for a refinance with Rocket Mortgage. Rocket says you’ll typically need a FICO credit score of at least 620. As with all lenders, you’ll also need an appraisal to determine the current market value of your home. Rocket also says that your monthly expenses shouldn’t be more than 45% of your monthly earnings.
- Where to apply: Rocket Mortgage
- States in which Rocket Mortgage lends: Rocket Mortgage originates loans in all 50 states and Washington D.C.
Discover Home Loans
Discover Home Loans has a lot going for it, including that this lender doesn’t charge closing costs. But this is only a good option if you don’t need too large of a refinance: Discover Home Loans’ maximum loan amount for refinances is $300,000.
But if you don’t have to refinance more than that? Discover is a good choice. Start with the closing costs. Discover doesn't charge any. According to Discover, you'll be charged nothing in application, appraisal, and origination fees. Discover says you'll be responsible for no costs at all at closing. This can save you thousands of dollars on your refinance.
Discover is also open about the interest rates that it charges. According to the company's website, your interest rate on a refinance as of October 2023 will range from 6.49% to 11.54%, depending on the strength of your credit. You can choose from terms of 10, 15, 20, or 30 years when you refinance. Discover says you’ll need a FICO credit score of at least 620 to qualify for a refinance.
How long it takes Discover to close your loan will vary, but on its site, Discover estimates that it will take about one to two weeks for you to apply online, have Discover review your application, and upload your documents. It will then take Discover about four weeks to process your information and conduct the underwriting process, determining if you can afford your monthly mortgage payment. Discover says scheduling your closing will take about one to two more weeks.
- Where to apply: Discover Home Loans
- States in which Discover Home Loans lends: Discover lends in all U.S. states except for Iowa and Maryland.
PenFed Credit Union
Looking for that more personal touch when refinancing your mortgage? You might consider working with credit unions, which are often known for more personal service. And one that provides plenty of options for refinances? McLean, Virginia-based PenFed Credit Union.
According to PenFed, which originates loans in all 50 states, refinance rates started at 6.75% in mid-October 2023. PenFed [DR10] offers traditional refinances that let homeowners change their existing loan's interest rate, term, or both; cash-out refinances, in which you refinance for more than what you owe on your current mortgage, receiving the extra dollars in a lump sum payment that you can use however you want. Home equity lines of credit, better known as HELOCs, which are revolving lines of credit secured against your home.
PenFed also offers refinances with no closing costs. The credit union says that it will cover VA funding fees, title fees, recording fees, transfer taxes, appraisal costs, credit report fees, and flood certification costs.
To apply for a PenFed refinance, you must provide copies of one to two months of paystubs and at least one year of W2 forms. If you are self-employed, you'll also need to provide copies of your last two years of tax returns.
- Where to apply: PenFed Credit Union
- States in which PenFed lends: PenFed Credit Union offers refinance in all 50 states.
Chase
Fewer banks are larger than Chase. And with that size comes options. No matter what loan type you want, Chase can provide it for you.
Chase offers standard 15-year or 30-year, fixed-rate loans. But you can also apply for FHA or VA loans or adjustable-rate loans in which your mortgage interest rate might rise or fall each year. You can customize your loan’s terms, too: Instead of taking out a 15-year or 30-year mortgage, you can opt for shorter-term loans that will reduce the interest you pay during the life of your loan.
Your interest rate will vary depending on your credit, where you live, and the size of your refinance, but as of the middle of October, the average rate on a 30-year, fixed-rate mortgage from Chase stood at 7.375%, while the average rate on a 15-year, fixed-rate mortgage was 7%. Chase does charge origination fees. These fees, though, will vary.
Chase states that you’ll typically need a home appraisal when you apply for a refinance. But there might be some circumstances when you can skip this step. You can start the application for a refinance online with Chase, and you can also meet or speak with a loan officer if you have any questions. Chase is a national bank that operates in all 50 states.
- Where to apply: Chase
- States in which Chase lends: Chase offers refinances in all 50 states.
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Best lenders for a mortgage refinance summary
Lender | Origination fees? | Interest rates (as of October 17, 2023) |
Ally Home | Ally does not charge lender fees, but you might be responsible for third-party fees | 7.75% for a 30-year, fixed-rate mortgage; 7.625% for 15-year, fixed-rate loan |
PNC Bank | PNC does charge origination fees that vary by borrower | 7.75% for a 30-year, fixed-rate mortgage; 6.875% for a 15-year, fixed-rate mortgage |
Rocket Mortgage | Closing costs vary, but Rocket says most will pay 3% to 6% of their total loan amount | 7.375% as of mid-October for a 30-year, fixed-rate mortgage |
Discover Home Loans | Discover charges no closing costs. | As of mid-October, interest rates ran from 6.49% to 11.54% |
PenFed Credit Union | PenFed charges no closing costs | Refinance rates started at 6.75% for a 30-year, fixed-rate mortgages as of mid-October. |
Chase | Chase does charge origination fees, though these fees will vary. | 7.37% on average for a 30-year, fixed-rate loan as of mid-October. 7% average for 15-year, fixed-rate loans |
Why you should consider a refinance
Not all homeowners should consider refinancing their mortgages. If you have a low-interest rate – in the 3% range, say – you might not want to trade your existing mortgage for one with an interest rate of 7% or 6%. And if you recently bought your home – say one or two years ago – you might not have enough equity to refinance. Most lenders require that you’ve built 20% equity in your home to qualify for a refinance.
But if you want relief from high mortgage payments, you might consider refinancing to a longer-term loan that will leave you with a smaller monthly payment. And if you’re tired of paying tons of interest? Going the opposite route by refinancing from a longer-term loan to a shorter-term one can dramatically reduce the interest you pay each month and over the lifetime of your mortgage.
FAQs
What is mortgage refinancing?
Mortgage refinancing is the process of replacing your existing mortgage with a new one, often with different terms and interest rates. This is typically done to lower monthly payments, reduce interest costs, or access equity in your home.
When should I consider refinancing my mortgage?
You might consider refinancing when interest rates are lower than your current rate, your credit score has improved, or you want to change your loan terms to better fit your financial goals.
How much does it cost to refinance a mortgage?
Refinancing typically involves closing costs, which can include fees for the application, appraisal, title search, and more. These costs can vary but are usually around 2% to 5% of the loan amount
What is the difference between a fixed-rate and an adjustable-rate mortgage (ARM) when refinancing?
A fixed-rate mortgage has a stable interest rate that remains the same for the entire loan term, providing predictability. An ARM has an initial fixed-rate period but then adjusts periodically based on market rates, potentially resulting in lower initial rates but higher uncertainty.
How does my credit score affect mortgage refinancing?
A higher credit score often helps you qualify for better interest rates and terms. Lenders typically offer the best rates to borrowers with excellent credit.
Can I refinance if I have an existing second mortgage or home equity loan?
Yes, you can refinance even if you have a second mortgage or home equity loan. However, the process may be more complex and may require coordination with the lenders of both loans.
Is it possible to refinance if I have bad credit?
It can be more challenging, but some lenders offer options for homeowners with credit issues. Be prepared for stricter terms and higher interest rates in such cases.
Can I refinance more than once?
Yes, you can refinance multiple times, but it's essential to consider the costs, benefits, and your long-term financial goals each time.
How long does the mortgage refinancing process take?
The process typically takes 30 to 45 days, but it can vary based on factors like lender efficiency and the complexity of your application.
Use Quicken Loans to Check Top Lender Rates
- Powerful home equity solutions
- Get transparent rates from providers
- TrustPilot Rating 4.6 out of 5
- Connect with lenders for $0
- 100% online experience
The bottom line
Refinancing a mortgage isn’t free, so make sure that a refinance will meet your financial goals before you apply for one. And if you decide to refinance, check out any of the six lenders above.
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Writer
Dan Rafter is a freelance writer who has more than 20 years experience covering personal finance. He's written for the Chicago Tribune, Washington Post, Bankrate, CreditCards.com, Rocket Mortgage, NortonLifeLock and several others.
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