Compare Mortgage Refinance Lenders
Welcome to the Quicken Loans marketplace, your one-stop shop for comparing refinance lending experts. We’ll show you how refinancing works and equip you with the knowledge and tools you need to choose the right mortgage for your finances.
What Is Mortgage Refinancing
When you refinance, you replace your current home loan with a new mortgage. Homeowners often refinance to get a better mortgage interest rate, change their loan term or borrow their equity.
There are a few different types of refinancing:
- Rate-and-term refinance. You change your interest rate or loan term without borrowing equity.
- Cash-out refinance. You get a new, bigger mortgage based on your home’s current market value, pay off your existing loan and keep the difference in cash. You repay what you borrow as part of your new mortgage.
- Streamline refinance. This is a simple way to refinance an FHA loan to reduce your interest rate or switch from an adjustable-rate mortgage to a fixed-rate loan.
- No-closing-cost refinance. Your new mortgage’s closing costs are added to the loan amount, allowing you to refinance with no money upfront.
Why Refinance Your Mortgage?
Here are some reasons why you might consider refinancing your mortgage:
- To lower your monthly payment. Refinancing to a lower interest rate will reduce your mortgage payment and give your budget more breathing room.
- To protect against rate increases. Switching from an ARM to a fixed-rate mortgage prevents your interest rate from increasing and makes budgeting for housing costs more predictable.
- To take more time to repay your loan. Extending your loan term reduces your monthly payment but may cost you more in interest.
- To pay off your loan more quickly. Refinancing to a shorter loan term with a higher monthly payment will help you save money on interest and finish repaying your mortgage faster.
- To borrow equity as cash. If you need money to achieve goals like renovations, debt consolidation or paying for education costs, a cash-out refinance lets you borrow your equity and repay it as part of your new mortgage.
How To Choose A Refinance Lender
You don’t have to refinance with the same lender that issued your initial mortgage. Getting offers from a few refinance lending experts will help you find the best deal.
Here are some factors to consider when choosing a refinance lender:
- Interest rate and annual percentage rate. Determine which lender is offering you the best mortgage refinance rates.
- Closing costs. The amount you pay in fees will vary by lender.
- Customer service. Make sure your lender can answer any questions or concerns you may have along the way.
How To Compare Refinance Rates
When comparing loan estimates, take care to understand the following features:
- The interest rate. Be sure to compare the rate with your current mortgage rate as well as with other loan estimates.
- APR. How much lenders charge you in fees can make one loan more or less expensive than another with the same interest rate. The APR includes those fees to provide a broader measure of how much a loan costs.
- Fixed vs. adjustable interest rates. The low interest rate on an ARM likely will increase. A fixed-rate loan may seem more expensive at first, but the rate will never increase. Make sure you understand the pros and cons of each type.
- Loan term. A 30-year loan will have a lower monthly payment than a 15-year loan, but you’ll pay more interest and make payments longer.
Refinancing Requirements
To refinance, you need to meet eligibility criteria and pay upfront costs. Here are some common requirements for refinancing:
- Equity. You typically need at least 20% equity to refinance.
- Credit score. The minimum credit score you need to qualify depends on your loan type and lender. Here are the minimum scores required for common loan types:
- Conventional: 620
- FHA: 580
- VA: 580
- Jumbo: 680
- Debt-to-income ratio. Lenders compare your income and debt obligations to verify you have enough room in your budget to pay your mortgage. Each loan type has its own maximum DTI ratio:
- Conventional: 50%
- FHA: Varies
- VA: 45% to 60%
- Jumbo: 45%
- Appraisal. Lenders usually require a new appraisal of your home’s fair market value.
- Required documents. Your lender needs to see the following documents to verify your finances:
- W-2 or 1099 forms
- Recent income tax returns
- Recent pay stubs
- Bank statements
- Investment account statements
- Closing costs. You need to pay closing costs on your new mortgage, which typically range from 3% to 6% of the loan amount.
Why Trust Quicken Loans
Quicken Loans is an online financial services marketplace that helps people compare and connect with different experts and providers. We’re committed to giving you helpful information you can trust, because we understand that the money choices you make now affect your future well-being.
Calculators
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FAQ
Here are answers to common questions about mortgage refinancing.
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