Quicken Loans - Refinance Review
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Looking for a lower interest rate on your mortgage? Or maybe you want access to extra cash to pay for anything from remodeling your kitchen to paying off your credit card debt. A Quicken Loans mortgage refinance loan can help.
Quicken Loans, part of Rocket Loans, is a national mortgage lender that offers traditional and cash-out refinance loans. Refinancing to a new mortgage with lower interest rates can reduce the size of your monthly mortgage payments, bringing financial relief to homeowners who want to reduce their monthly debt load.
Is a Quicken Loans refinance the right choice for you? Read our Quicken Loans review to learn more about its benefits and potential drawbacks.
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What is a Quicken Loans refinance loan?
When you refinance your mortgage loan, you swap out your current mortgage with a new one, hopefully with a lower interest rate. The goal is to reduce your monthly mortgage payments by lowering your loan’s interest rate.
Here’s an example: Say you were paying off a 30-year, fixed-rate mortgage of $350,000, and your loan had an interest rate of 6.87%. Your monthly home mortgage payment, not counting the money you spend each month on property taxes and homeowners & mortgage insurance, would be about $2,233.
Now say you owe $250,000 on that same loan. If you refinance to a $250,000 fixed-rate, 30-year mortgage at a lower interest rate of 6%, your new monthly payment, again not counting taxes or insurance, would be about $1,498.
That's a savings of about $735 a month or $8,820 a year.
Quicken Loans offers two types of refinance loans: a traditional mortgage refinance and a cash-out refinance.
In a traditional mortgage refinance, you simply exchange your current mortgage with a new loan with a new interest rate. In a cash-out refinance, though, you not only get a new mortgage loan, but you also get a bit of cash to spend however you’d like.
This works by refinancing a new loan for more than you owe on your current mortgage. For example, if you owe $200,000 on your current mortgage, you could then refinance to a new mortgage from Quicken Loans for $270,000.
You’d receive the extra $70,000 as a lump-sum payment. You can then use that extra cash to add a second bathroom to your home, cover the costs of your child’s college tuition, pay down high-interest-rate credit card debt, or do whatever else you’d like.
Because Quicken Loans is a national mortgage lender, it offers refinances to homeowners in all 50 states and Washington, D.C.
Related: Quicken Debt Consolidation Review
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How does a Quicken Loans refinance loan work?
To apply for a refinance with Quicken Loans, start at this page.
Click on the continue button. That will bring up this page:
You'll select your home type and then be brought to this screen to select how much you owe on your mortgage:
Next, you'll be asked about the value of your home.
Depending on your mortgage's remaining balance and your home's worth, Quicken Loans will ask how much of the value you wish to take out a loan against.
Quicken Loans will then ask what your current mortgage interest rate is, who it is paid to, if you have an FHA loan, if you are military, your credit score, employment status, and then an email to which it can send you your loan results. You cannot move ahead without adding your email.
After you provide this information, Quicken Loans will connect you with a loan specialist. You can complete your loan application online by talking to the specialist by phone, online chat, or email.
As when working with all mortgage lenders, you’ll need to prove your ability to repay your Quicken Loans refinance. To do this, you’ll provide copies of such financial documents as your last two paycheck stubs, last two months of bank account statements, last two years of federal income tax returns, and last two years of W-2 forms.
You’ll also need to give Quicken Loans permission to review your credit reports and three-digit FICO credit score. Quicken Loans will look at this information to determine how well you’ve handled your credit and paid your bills in the past.
As with all mortgages, the higher your FICO credit score, the more likely you will qualify for a Quicken Loans refinance with a low interest rate. Lenders consider FICO scores of 740 or higher very good and those of 800 or higher excellent. If your FICO score is in this range, you’ll boost your odds of nabbing a lower interest rate.
You’ll also need enough equity in your home to qualify for a Quicken Loans refinance. Equity is the difference between what you owe on your mortgage and how much your home is worth. If your home is worth $300,000 and you owe $140,000 on your mortgage, you have $160,000 in equity.
Quicken Loans typically requires homeowners to have at least 20% home equity to qualify for a refinance. To determine your home's equity, Quicken Loans will send an appraiser to your property. This real estate professional will determine how much your home is currently worth.
Quicken Loans generally requires a minimum credit score of at least 620 to qualify for a refinance. If you want a cash-out refinance, you are allowed to take up to 100% of your equity if your FICO credit score is at least 620.
How much does a Quicken Loans refinance loan cost?
Refinances aren’t free. Quicken Loans says it typically charges 3% to 6% of the amount you are refinancing in closing costs and fees charged by Quicken Loans and other third-party providers to originate your new refinance mortgage.
If you are refinancing $200,000, you can expect to pay from $6,000 to $12,000 in origination fees. You can pay or roll those costs into your loan’s total. You'd need enough equity to roll them into your new loan’s balance. Say you are refinancing a mortgage of $200,000, and your closing costs are $6,000. Instead of a new home loan for $200,000, you’d take out a new loan for $206,000.
Once you close on your refinance, you’ll pay it back with regular monthly payments with interest. The key is to make sure that your new monthly payment drops by enough to allow you to recover the closing costs charged by Quicken Loans quickly.
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Features of a Quicken Loans refinance loan
You can start your mortgage application online
You can do much of the work of applying for a Quicken Loans refinance online. Once you provide information about your home and income, you must contact a Quicken Loans loan specialist. You can work with this specialist over the phone, through email messages, or online chat.
Several loan options
You can refinance your current mortgage into several different loan types. You can choose a 30-year, fixed-rate mortgage or a shorter loan term, such as a 15-year, fixed-rate mortgage. You can also refinance into an adjustable-rate mortgage (ARM), a type of mortgage in which your interest rate can rise or fall over time.
Tax benefits
You can deduct the interest you pay on your new refinance loan from your income taxes. Married couples filing jointly can deduct up to $750,000 in mortgage interest each year.
There’s an app
You can track your Quicken Loans refinance loan through the company’s app, which you can download from Google Play or the App Store. Once you log into the Quicken Loans app, you can track your loan balance, make payments, and contact Quicken Loans.
Other ways of tapping your equity
A cash-out refinance is only one way to turn the equity in your home into cash. Quicken Loans also offers both home equity loans and home equity lines of credit, better known as HELOCs, that allow you to tap into the equity you’ve built.
Is a Quicken Loans refinance loan right for you?
Are you ready to refinance your current mortgage with Quicken Loans? Here is when a refinance might make sense:
You have a strong FICO credit score. The higher your FICO credit score, the more likely you will qualify for a refinance loan with a lower interest rate. This is important: If your interest rate is too high, your new monthly mortgage payment won’t be low enough to justify the closing costs of a refinance.
You’ve built up enough equity. You’ll typically need at least 20% equity in your home to qualify for a refinance from Quicken Loans. If you haven’t owned your home long enough to build this equity, or your home has lost value over the years, you might have to wait before applying for a refinance.
Your monthly debts aren’t too high. Most lenders want your total recurring monthly debts, including your new mortgage payment, to equal no more than 43% of your gross monthly income. Recurring debts include your mortgage, auto, student and personal loan payments and the minimum you must pay each month on your credit cards. If your debt-to-income ratio, or DTI ratio, is too high? You might have to pay down some of your debts before applying for a refinance.
You have a home renovation planned. A cash-out refinance is a good choice if you want to tackle major home renovations. Not only will a Quicken Loans cash-out refinance provide you with a lump sum of cash that you can use to pay for your renovations, but it will do so at a lower interest rate than what you’d get with credit cards or personal loans. You will also be able to deduct the interest on your cash-out refinance if you use the funds to pay for a home improvement that will increase the value of your home.
Who should not apply for a Quicken Loans refinance loan?
A Quicken Loans refinance isn’t right for everyone, though. Here are some examples of when a refinance might not make sense.
You can’t reduce your monthly payment by enough to justify the costs. Closing costs can be expensive, with Quicken Loans estimating that you’ll pay from 3% to 6% of your loan’s total amount in closing costs. If you can’t reduce your mortgage payment by enough to pay that back quickly, a refinance might not make financial sense.
You have a history of late or missed payments. You’ll need a high credit score to qualify for the low mortgage rates that can make a refinance pay off. But if you have a history of late or missed payments, the odds are high that your credit score won’t be strong enough. A single late or missed payment can cause your credit score to drop by 100 points. These financial missteps have remained on your three credit reports for seven years. You might need to rebuild your credit score several months before applying for a refinance.
You haven’t built enough equity. You’ll generally need at least 20% equity in your home to qualify for a Quicken Loans refinance. You’ll also need more equity to apply for a cash-out refinance. If you haven’t built enough? You’ll need to wait before applying for a refinance.
Pros and cons
Pros
- With a high-enough credit score, you can tap 100% of your equity with a cash-out refinance.
- Rocket Mortgage refinances are available in all 50 states and Washington, D.C.
- You might be able to deduct the interest you pay on a Rocket Mortgage refinance on your income taxes.
- You can track your new loan through Rocket Mortgage’s app.
- You can start an online application
Cons
- Refinancing can be pricey, with closing costs running from 3% to 6% of your total loan amount.
- You’ll need a FICO credit score of at least 620 to qualify for a refinance from Rocket Mortgage.
- You’ll need at least 20% equity to qualify for a Rocket Mortgage refinance.
Use Quicken Loans to Check Top Lender Rates
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Quicken Loans refinances vs. the competitors
Lender | Refinance costs | Cash-out refinances available? | Credit score needed |
Quicken Loans | 3% to 6% of total loan amount | Yes | 620 for a traditional refinance; 620 to access 100% of your equity in a cash-out refinance |
Wells Fargo | Usually 2% to 5% of your total loan amount | Yes | Does not provide a minimum credit score needed for a mortgage loan. |
Better Mortgage | Most loans have closing costs ranging from $1,500 to $5,500. | Yes | You’ll need a minimum credit score of 620 for a refinance. |
Wells Fargo refinance
A national lender, Wells Fargo originates mortgages, including refinance and cash-out refinances, in all 50 states and Washington, D.C. Wells Fargo is a full-service bank, meaning that you can complete the refinance loan process online or meet in person or over the phone, with a mortgage loan officer if you prefer a more personal touch.
Wells Fargo does not list a fee schedule for its refinance loans but says on its website that borrowers typically pay from 2% to 5% of their total loan amount in closing costs. Wells Fargo also doesn’t disclose the minimum credit score borrowers need to qualify for a refinance. The lender says that while considering credit scores when reviewing refinance applications, it also looks at other factors such as the income, debts, payment history, and job status of applicants.
Better Mortgage
Better Mortgage is an online direct lender, and it lends in all 50 states and Washington, D.C. Because Better Mortgage is an online lender, you can apply and complete the refinance application process online with this company.
The cost of a refinance varies, but Better Mortgages says that most of its borrowers pay between $1,500 and $5,500 in closing costs. Better Mortgage also allows you to roll these closing costs into your total loan amount so that you don’t have to come up with that much cash at closing.
Better Mortgage says borrowers need a FICO credit score of at least 620 to qualify for a refinance.
The bottom line
Refinancing your current mortgage to a new loan with a lower interest rate can shave hundreds of dollars off your mortgage payment. As a first-time homebuyer, tapping your equity through a cash-out refinance can give you extra cash to fund home improvement projects, pay off high-interest-rate credit card debt, or cover any other big expense.
But it’s important to research before choosing the best mortgage and committing to any refinance, including one originated by Quicken Loans. Refinancing isn’t free. The key is to save enough money each month to recoup the closing costs that Quicken Loans charges quickly.
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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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