Best Refinance Mortgage Companies of 2018

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Refinancing has big benefits — you can lower your monthly payments, score a better interest rate, or even leverage your home for some cash to pay off other expenses — but only if you do it right. Doing it wrong isn’t dire; the worst-case scenario is spending money on the process only to realize you aren’t really saving that much on your mortgage. That’s not the end of the world, but also not the point.

The best refinance mortgage companies, like my favorite, Quicken Loans, don’t just have good rates; they also have stellar customer service that’ll help you get it right. In 2013, PricewaterhouseCoopers published a report that found fees and terms only account for 10 percent of a positive memorable lending experience, while nearly 50 percent is driven by the loan officer. Trading in a lender that has your back for a few extra bucks won’t feel like such a good deal when you need help or have questions — and considering you’ll be working together for upward of 30 years, there are bound to be questions.

The Simple Dollar’s Picks for Best Refinance Mortgage Companies

If you already have a mortgage, your current lender will definitely be able to help you refinance, but it pays to shop around — for better rates and for better service. This is especially true if you’re unsatisfied with your current mortgage company (which is more than likely — according to the PwC report, people are even more frustrated with the financial services industry than they are with airlines).

In my search for the best refinance mortgage lenders, I looked for companies with tons of experience and an effortless process, and then I considered the bottom dollar. Granted, just like when you got your first mortgage, refinancing is personal: Your rates, terms, and closing costs will vary depending on your credit score, how much equity you have in your home, and what your home is currently worth. That said, my three top picks are a good place to start your search.

I looked for five things in each lender.

Availability. Your neighborhood mortgage company might have rock-bottom rates and loan officers you want to keep as friends, but I set my sights on refinance mortgage companies that operate in at least 35 states, just to make sure most of you would be able to work with my top picks. If nothing else, these nationwide guys will act as good comparisons if you prefer going local.

Red flags. Any lender can have the occasional paperwork screwup, especially if it’s a national operation with dozens of offices and hundreds of loan officers. But repeat issues are a fat red flag that something bigger could be going on: illegal quota incentives, for example, or unlicensed loan officers. I perused the Nationwide Mortgage Licensing System, the official system of record for mortgage companies, and cut any lender with multiple complaints.

A good track record. I looked for lenders that work primarily in refinancing, and then at their loan origination rate. It isn’t an exact science, but lenders that originate (meaning they complete) more loans than they deny have a better chance of getting yours turned around quickly and without a hassle. It’s true that less-than-reputable lenders will have a great origination rate (come one! come all!), but when you’re refinancing, you’ve already qualified for the mortgage the first time, so it’s less of a concern here.

A smooth experience. Like I said, you’re going to be working with this lender for decades — you shouldn’t have to dread getting in touch. I ranked the quality of each lender’s website (how helpful was its help center, how lively was its live chat) and tested how well the loan officers answered my questions. I even got pre-approved online (12 times!) to make sure the whole process was fast, easy, and not intimidating.

Reasonable rates and fees. I used a standardized quote to evaluate each lender’s current interest rates, points, fees, closing costs, and estimated monthly payments. Obviously the rates and fees you’ll be quoted will be different, but this was a good way to get an idea of how different lenders stack up. The average interest rate I got was 3.875 percent, with an average closing cost of $5,422 — anything higher didn’t make it into my top picks.

Quicken Loans

Quicken Loans lives up to the first half of its name — it keeps everything clipping along with a slick website full of useful tools, from mortgage calculators to an in-depth knowledge center. When it came to the application process, Quicken Loans blew its competition away: features like Rocket Mortgage, which walks you through the entire refinancing process, and MyQL, an app that tracks the status of your application from start to finish, make it possible for the refinancing to be done entirely online — no calling in, no meeting up, no scrambling for pay stubs. That you-take-the-reins approach is especially cool if it isn’t your first time refinancing, and you just want to get it done.

Screenshot of Quicken Loans homepage

Two of Quicken Loans’ biggest features — Rocket Mortgage and MyQL — are front and center on its home page.

Looking for a little more TLC from your mortgage company? No worries — Quicken Loans’ agents are quick and accommodating. My calls to customer service had wait times of less than five minutes even during peak hours and a helpful loan officer answered every question I had. When I asked how to calculate my break-even costs, she broke down the math. And when I asked what went into the closing costs, she explained it better than any other lender I contacted.

Honestly, I wasn’t surprised. When it comes to refinancing, Quicken Loans is right up there with the big banks. According to Credio, it has originated a whopping 376,200 loans — fewer than Wells Fargo’s 829,900, but right on par with Chase Bank. More notable, though, is the percentage of loans it originates out of how many apply — at about 75 percent, it’s nearly double both Wells Fargo and Chase.

New American Funding

New American lacks the polish of Quicken Loans. Its main page — which shouts, “We close faster!” and has a lot of fine print — felt borderline scammy and would normally be enough to scare me away. But as soon as I started poking around, I realized it offered a lot of straightforward information, and the sales hype quieted down.

Screenshot of New American Funding website

While the amount of up-front fine print initially gave us pause, we warmed to New American Funding once we dug in.

The company has a knowledge center that homes in on refinancing, walking you through the process, the different programs, and how to get started. The pre-approval form was easy: I applied in less than 15 minutes and received a response in less than an hour that laid out the next steps. Calling in was also quick: no hold times, no phone trees, no transfers to different departments.

New American doesn’t have that immediate name recognition (it’s no mega-bank) and it doesn’t have the big origination numbers that Quicken Loans can boast: only 12,900, according to Credio. That said, its numbers are certainly respectable, and it originates more than half of the loan applications it receives — again more than Wells Fargo and Chase.

First Internet Bank

I was really impressed by First Internet Bank from start to finish. Its step-by-step guide to completing a refinance made the whole process seem manageable. When I needed help, I could open up a quick online chat with a loan officer, or call in and get connected right away. And its response time was lightning fast: when I applied for pre-approval, First Internet had a reply in my inbox as fast as I could refresh.

Screenshot of First Internet Bank website

First Internet Bank’s easy-to-follow guide should make refinancing a bit less intimidating.

That said, First Internet Bank is way smaller than my other top picks, only originating 2,500 loans (just under half of its total applications). Comparing its origination numbers with bigger players is like comparing the Wabash College football team with USC. But! First Internet’s excellent customer service and fair rates definitely keep it in the running for me.

Refinancing is a lot like getting your first mortgage, with one notable exception: equity.

To get approved for a refinance, you usually need at least 20 percent equity, as well as a “loan-to-value ratio” less than 80 percent. That LTV is how refinance mortgage companies assess your risk; it’s the ratio between what your home is currently worth and how much you currently owe on your mortgage. Say, for example, your home is worth $275,000 and you owe $200,000 — your LTV is 72.73 percent. (Fannie Mae also has a calculator you can use to figure it all out.) The lower your LTV, the better your rates will be.

Figuring out how much equity you have in your home can be tricky. The number is based on the current value of your home, your current mortgage, and how much you’ve paid off. You can pay an appraiser to value your home, but it isn’t recommended — most lenders won’t accept a third-party appraisal and you’ll be stuck paying for two if you choose to go ahead with the refinance application.

Instead, talk to a mortgage lender who can give you an idea of how much equity you have. You can start with your current lender if you’re more comfortable talking shop with someone you know, but most mortgage lenders will be happy to look at your equity for you and provide an estimate, which may be enough to decide if you want to keep going or not. But keep in mind: It is only an estimate. If you do decide to refinance, the lender will order an official appraisal to determine exactly how much equity you have.

Refinancing won’t pay off immediately.

First you’ll have to pay closing costs and fees that could stretch into the thousands. In order to make that money back and start reaping the benefits of refinance, you’ll have to stay in your home for several months — or even years.

Say I had taken out a $350,000, 30-year loan at a 4.75 percent interest rate, paid it down to a $320,244 loan balance, and was looking to refinance. First Internet Bank might offer me a rate of 3.26 percent to refinance my loan, with $4,825 in closing costs. Taking the deal would save me $366 a month — but it would take 11 months before I hit the break-even point.

Having trouble estimating your break-even point? Our top picks (and most mortgage refinance companies) offer calculators on their websites that walk you through the process so you can skip all the math.

You may be able to negotiate your closing costs and reach your break-even point faster, but not by much. One way to save a bit is to ask your lender for an automated appraisal (where the lender will evaluate your home based on data), so you can skip hiring someone to physically inspect the property. It won’t give you a huge boost, but every little bit counts.

You may also get the option of a “no closing cost refinance,” but be wary. While you won’t pay any closing costs up front, nothing comes for free. Instead, the lender will bundle those closing costs into your refinance, say by charging a slightly higher interest rate. You’ll save some now, but you’ll end up paying more over time.

Your best bet is to plan on living in your home for a few years to at least pass your break-even point and build up savings from the refinance.

When it comes to costs, timing really is everything.

It is (obviously) best to refinance when you can get the lowest rate, but timing the market can be tricky. Rates can fluctuate day by day, but staying ahead of trends will help you get the best deal.

Case in point: Late 2015, the Federal Reserve voted to increase the interest rate. And while it’s the mortgage companies and the market that determine the current mortgage rates (not the Fed), most experts agree this historic increase will make rates go up.

When? No one really knows. Some say the increase started having a small effect in late 2016, while others say it could take a year or more to see any noticeable changes. Either way, if you’ve built up equity, plan to stay put for a while, and if you think you can get a much lower rate by refinancing, do it now before rates hike.

You can use your current mortgage lender to refinance — but you don’t have to.

Maybe you’re loyal to your current mortgage company. Maybe it’s sent a few refinancing offers in the mail and makes it seem so easy. Should you stick around?

If you love your lender, sure. But one thing to check is whether your current mortgage servicer is still the same lender you originally got your mortgage from. In today’s market, most mortgages are sold to other lenders multiple times. If your loan was recently sliced, diced, and handed off to someone new, it’s worth checking out its level of service. Don’t like what you see? It’s time to find a new lender.

Second, do a deep dive into the rates to see if you can score a better deal. If you comparison shop and pre-apply with a bunch of lenders in the same 30-day period, you won’t get a big ding on your credit score (all those separate queries will be counted as one). If you find a new lender you love, it will pay off your outstanding loan and deliver you that new — and better — set of terms.

Ready to Refinance?

Since you’re already an experienced mortgage-holder, refinancing will feel like a familiar process. The lender will pull your credit and you’ll have to prove your income and finances, but there are some different steps to familiarize yourself with too.

Some new paperwork. When you first applied for your mortgage, your lender was focused mostly on your finances, but now it’ll be focused on your equity too. Plan to provide some new documentation, including a copy of your homeowners insurance (make sure it is current), proof of assets, and proof of income.

The big appraisal. Your lender will order a title search to make sure you actually own the property and don’t have any secret liens. Then, it’ll order an appraisal and you’ll find out what your home is currently worth — and how much equity you’ve built up. This is a huge step!

Hurry up and wait for the final underwriting. If your appraisal determines you have enough equity to complete the refinance, the last stages of underwriting will begin. There won’t be much for you to do at this point, but plan on sending over some last-minute documents.

Head into closing. This won’t be as tedious as closing on your house the first time around, but there will be some paperwork to read and a few documents to sign. Some lenders, like my top pick, Quicken Loans, will let you refinance entirely online now, but some other lenders still require notarized documents sent through the mail. Boring? Yep! But it’ll be over soon and you’ll be on your way to a lower monthly payment.