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Best Refinance Mortgage Companies of 2021
In the heavy shadow of coronavirus, many banks and lending institutions are making special concessions for homeowners struggling from 2020’s economic downturn. While the coronavirus has created hardship for some American families, it has also presented a glowing opportunity to refinance your home loan for far more favorable terms.
Finding the best mortgage refinance companies isn’t easy — you’re agreeing to pay a new company for years to come, so you should take the time to ensure you pick the best one. We used our proprietary SimpleScore measuring system to rate and review the best refinance companies to make your decision easier.
Current refinance rates
According to Bankrate’s latest survey of the nation’s largest mortgage lenders, these are the current refinance average rates for a 30-year, 15-year fixed and 5/1 adjustable-rate mortgage (ARM) refinance rates among others.
|30-Year Refinance Rate||3.120%||3.280%|
|30-Year FHA Refinance Rate||2.820%||3.680%|
|30-Year VA Refinance Rate||2.680%||2.880%|
|30-Year Jumbo Refinance Rate||3.140%||3.200%|
|20-Year Fixed Refinance Rate||3.030%||3.190%|
|15-Year Fixed Refinance Rate||2.430%||2.640%|
|15-Year Jumbo Refinance Rate||2.440%||2.500%|
|10/1 ARM Refinance Rate||3.310%||4.010%|
|5/1 ARM Refinance Rate||3.120%||4.020%|
|5/1 ARM Jumbo Refinance Rate||3.030%||3.900%|
|7/1 ARM Refinance Rate||3.110%||3.880%|
|7/1 ARM Refinance Jumbo Rate||3.230%||3.820%|
Rates data as of 5/5/2021
The 6 best mortgage refinance companies of 2021
- SoFi: Best for Member Perks
- Bank of America: Best 15-Year Fixed APR
- Santander Bank: Best 30-Year Fixed APR
- Rocket Mortgage: Best for Fast Refinancing
- Third Federal Savings: Best for Minimal Fees
- Raymond James Bank: Best for Flexibility
Mortgage refinance lenders at a glance
|Lender||30 Year Fixed APR||Min Credit Score||Fees|
|Sofi||Varies||Varies||Lender fees: varies|
|Bank of America||3.20%||620||Origination fee: varies|
Closing costs: 2% – 5%
|Santander Bank||Varies||Varies||Appraisal fee: varies|
Returned Payment Fee: $30
Payment Collection Fee: $10 for online payments, $15 with customer service agent
|Rocket Mortgage||3.42%||580||Origination fee: usually 0.5% to 1% of loan|
|Third Federal Savings||3.160%||Varies||Closing costs: $295-$595 for low cost loans|
Return check: $36
Application fee: none
Prepayment fee: none
|Raymond James Bank||3.97%||640||Varies|
What is a mortgage refinance?
A mortgage refinance is a powerful financial move that allows homeowners to replace their original mortgage loan with a new loan under new terms and new rates. A mortgage refinance company will offer homeowners new rates to decrease monthly payments and/or longer terms to extend the life of the loan. You can refinance with a new mortgage refinance company or stick with the current one if it’s beneficial.
Why refinance your mortgage
There are a number of reasons why you may want to refinance your mortgage, but the most popular is that you’ll save money on interest by doing so. For most homeowners, refinancing involves getting a lower interest rate than the one the current loan has. That’s what’s driving a lot of the refinances happening right now. Record-breaking interest rates have drummed up interest in purchase and refinance loans because of how much money you potentially can save by taking out a loan now rather than in the future.
Another driving factor for refinancing is to change the type of loan or the term that your current home loan has. Let’s say you have an adjustable-rate mortgage loan that is at the end of the fixed portion. You may opt to refinance so you can get the predictability of a fixed-rate loan instead. Or, you may have purchased your home with a 15-year loan term and then hit some financial roadblocks. You may want to refinance to a 20- or 30-year mortgage to give you more cushion in your monthly budget.
Ultimately, there are tons of reasons people finance. What you refinance for will be based on what your end goal is.,
How mortgage refinancing works
A home loan doesn’t last just a few months or years like a personal loan does; instead, it can last for 30 years and more. A lot can happen in so many years, and your needs will likely change. This is when mortgage refinancing can be an invaluable help to your household.
When you refinance, the process is quite similar to your original home loan. There is plenty of documentation that will need to be submitted, and your credit score and payment history will be heavily weighted in the decision to grant you a new loan.
While it may take some work to refinance your mortgage, there is a lot that can be gained from the process. This is not ideal for homeowners who intend to move or sell the home in the coming years, but if you are settled in your home and need to adjust your current financing, this could be the right solution for you.
When the novel coronavirus struck in early 2020, the world came to a standstill, and markets plunged in response. With such low rates, many homeowners jumped at the chance to take advantage of the incredible savings they could bring.
It doesn’t take a global pandemic to bring beneficial mortgage rates, however. If you originally financed your home during a time when rates were very high, you could stand to save a lot of money by refinancing when market rates fall.
New loan terms
They don’t call it house-poor for no reason. When you first buy your home, it likely puts a real strain on your budget, but as the years pass, your economic situation can change. Not only can you benefit from a better rate, but sometimes, you can also benefit from better loan terms, too. You could stand to reduce the length of your loan, or you could change from an adjustable-rate mortgage to a fixed-rate that brings greater stability.
When to refinance your mortgage?
The market is not the only thing that can dictate when is a good time to refinance your home. Most homeowners will refinance when they stand to gain at least a 1% decrease in rates on their home loan, but if your refinance is based on need, you likely have personal circumstances that will not wait until the market fluctuates in your favor.
Everyone’s situation is different, but it is always ideal if you can benefit from lower interest rates and better terms when you refinance your mortgage.
COVID-19 and the housing market
The COVID-19 pandemic has had a number of unexpected effects on the housing market. We’re seeing record-low interest rates currently, which provide a huge opportunity for buyers and refinancers to borrow money at extremely low rates. There have been many weeks when we’ve seen rates fall to under 3%, which was unheard of last year at this time.
Not only has it knocked refinance rates down to some of the lowest we’ve ever seen, but it has also caused housing shortages in markets across the nation. With interest rates as low as they are, buyers and refinancers are taking advantage of the money-saving opportunity that COVID created.
It’s not just large, high-demand metro areas like San Francisco or New York City that are feeling the housing crunch, either. Small towns across America have been inundated by home buyers who are fleeing the dense, highly-populated cities for more rural areas. This demand hasn’t just caused housing shortages, either. It has also caused interest rates to fluctuate from day to day due to demand. The rates are still incredibly low with the fluctuations, but it’s something to keep in mind as you shop for rates.
Lenders have also tightened their parameters for approval to help slow some of the demand and protect themselves from default. The economy is unstable right now due to COVID, and there are millions of people in forbearance or at risk of defaulting on their loans. To avoid more issues, some lenders are requiring higher credit scores, more money down or a low debt-to-income ratio to approve borrowers for loans.
The good news is that even if you’re in forbearance currently, the rules recently changed to allow you to refinance after you’re out of forbearance. So, if you’re trying to refinance and are worried because you were recently in forbearance, COVID has caused a change to that rule that works in your favor.
How to choose the best mortgage refinance for you
When you commit to any kind of loan, it is crucial that it is the right kind of loan for you and carries terms that you are able to meet.
Here’s how to find the best place to refinance a mortgage
- Choose your mortgage refinance loan.
There are many different types of mortgage loan products that you can use to refinance your home loan. Fixed-rate mortgages are available in different lengths, like 15 and 30 years, and there is also adjustable-rate refinancing. You should also consider refinancing options from the Federal Housing Administration, the Department of Agriculture and the Veterans Administration for military households.
- Compare interest rates.
The loan terms for each lender can be very different and not only in the interest rate. You should also give consideration to the length of the loan to see if this is a realistic fit for your family’s needs.
- Don’t forget about the fees.
The fees for your mortgage refinance can vary drastically from lender to lender. Even the best mortgage refinance companies have their own costs for things like origination fees, late fees, application fees and prepayment penalties if you pay your loan off early. Read the fine print and weigh these fees against the other costs associated with each loan to find the one that will work best for you.
- Consider the eligibility criteria.
Some refinance providers have eligibility criteria like credit score or income requirements. Make sure you find out what the criteria are before applying — it doesn’t make sense to waste time on a lender if you know you’ll be denied.
We welcome your feedback on this article and would love to hear about your experience with the mortgage refinance loans we recommend. Contact us at firstname.lastname@example.org with comments or questions.