The home loan refinance companies help you get rid of your mortgages quickly and conveniently.
Having your own home is everybody’s dream but arranging for finances to build or buy a home is a hurdle in the way.
Luckily, mortgages facilitate you to fulfill your dream of owning a house. However, paying off mortgages can become a tedious task, especially if you are a salaried person.
Refinancing your mortgages or home loans allow you to pay off the mortgage at a lower rate by renegotiating it.
The reduction in monthly payments due to lower interest rates helps borrowers save money in the long run.
Criteria for Choosing a Mortgage Refinance Lender
You must keep in mind several things when selecting a mortgage lender to refinance your home loan. These factors include loan type, closing cost, interest rate, and customer service.
- Loan type
Not every mortgage and loan is for everyone. The most important thing that you must determine is the type of loan that suits your needs and its repayment period.
Firstly, specify the type of loan suitable to fulfill your needs, whether you need a short-term or long-term loan, and their respective repayment rates.
- Closing cost
Closing cost is another factor to consider while comparing different home loan refinance companies. Compare the closing cost with the interest rate being charged by the lender and choose the cost-effective side.
- Interest rate
Interest rate is an obvious factor that comes to mind when refinancing mortgages.
However, you must keep in mind that the interest rate itself depends on several other factors, and the most important among them is the credit score.
You must have a stable credit scoreto get a low-interest rate.
- Customer service
To analyze customer service, you can check out the reviews and ratings of a lender.
Good customer service is crucial in service businesses such as mortgage refinancing.
Choose the company that is readily available to assist you throughout the process.
Types of Refinance Loans
There is a wide range of mortgage loans available for borrowers for their specific refinancing needs and goals. Refinance loans can be broadly categorized into four types.
- Cash-out refinances: a cash-out refinance loan is available for VA, FHA, and conventional loans.
- Streamlined refinances: stream-lined refinance loans are available for VA, FHA, and USDA loans.
- Jumbo refinance loans: These loans represent large sums of money usually borrowed for real estate.
- Standard rate-and-term refinance: standard rate refers to the low-interest rate, and standard term represents monthly payment period.
When you refinance a mortgage, it can be different from your actual loan. There is no such restriction on refinancing the same kind of loan. However, you must select it after a keen analysis of significant factors.
Top Online Home Loan Refinance Companies
Before hiring professional services for your home loan refinancing, you must analyze and compare different offers. Here is an overview of top home loan refinance companies to select the best one for your refinancing needs.
Better.com, an online money lender company, is regarded as one of the best home loan refinance companies offering the best rate.
It provides a quick service to borrowers saving their time and money since all its functions are based on technology.
There is no origination fee charged by Better.com, making it a cost-effective option for you. However, you have to pay other charges such as closing costs.
The minimum credit score requirement to qualify for refinancing services is 620.
In the case of cash-out refinancing, it increases up to 680. To get the best rate, you must have a good credit score.
A drawback for this service is that its services are not available in every state. It also does not offer VA or USDA loans. This makes it a suitable platform for borrowers looking for conventional loan refinancing.
- Rocket Mortgage
Rocket Mortgage is yet another online refinancing company known for its proactive customer service. Their loans include conventional loans, Jumbo, VA, and FHA loans.
The company offers low-down payment options to borrowers, compelling them to prioritize it over others.
Despite being an online service, it offers customer support services with a large team of experts on the phone throughout the week.
The minimum credit score requirement for FHA loans is 580 and for others is 620. The down payment rate can range between 0%-3.5%.
To get a customized interest rate, you must undergo a credit check that might harm your credit score.
There are no lines of credit available with Rocket Mortgage.
Top Home Loan Refinance Companies with Physical Presence
Despite the popularity of online banking services, some functions need to be carried out face-to-face.
Several companies and banks offer dual services, i.e., online and bricks-and-mortar. Here are some of the top services on the list.
- Bank of America
If you are looking for the best bank for getting mortgage refinancing services, you should consider the Bank of America.
It facilitates customers through the online branch as well as phone services and is therefore considered a viable option among other home loan refinance companies.
The credit score requirement is quite high for borrowers setting the minimum score at 620 for a conventional loan while 660 to obtain a VA loan.
You can obtain an FHA loan against a minimum credit score of 620. The interest rate may range between 2.5% to 3.25%.
The bank facilitates customers in all states. The downside of Bank of America is that it does not deal in refinancing USDA loans.
- Guild Mortgage
Guild Mortgage is a mortgage refinancing company with a brick-and-mortar presence. It provides person-to-person services in 31 states while online services in 48 states.
It allows partially electronic services such as e-closing to let borrowers electronically sign documents. The company’s wide range of mortgage loans includes VA, USDA, FHA, Jumbo, and conventional loans.
To qualify for getting a conventional loan, the borrower must possess at least 620 as a credit score. The jumbo loan requires a score of 680, while the rest are available for a minimum credit score of 600.
The current mortgage rates are not available on the website of Guild Mortgage, and one has to visit their branch to get this information.
- Loan Depot
Loan depot is known as a non-bank refinancing specialist company. It provides online refinancing services to customers dealing in conventional, FHA, VA, and Jumbo loans.
However, USDA refinancing is not available. The application process is online, but a one-on-one meeting is required for the closing purpose.
The company enjoys high scores for customer satisfaction, but the loan costs it charges are quite high.
The minimum credit score requirement ranks between 580 to 620—the minimum down payment for the loan may be 3.5% which becomes attractive with offered customer discounts.
- Ally Bank
Ally Bank ranks as one the best home loan refinance companies for jumbo loans. The high lending amount and low lender fee charged by Ally result in top-ranking refinancing companies.
The application process and most of the paperwork take place online. However, the closing of the application is done after visiting the branch. It charges a standard lender’s fee that may range between 2-5%.
It requires a low credit score of 510 points for FHA loans and 620 for jumbo loans. This is the ideal platform for borrowers having low credit scores.
The company’s website presents all rates required for refinancing along with a mortgage calculator to allow borrowers to make quick calculations.
The specialty of Ally is home-ready loans, but it does not provide USDA, VA, and FHA loans.
- Guaranteed Rate
Guaranteed Rate Mortgage is a customer-preferred refinancing platform. It offers conventional VA, FHA, USDA, and Jumbo loans.
It is known for providing borrowers with a highly professional digital experience along with down payment assistance.
The minimum credit score requirement to avail VA and FHA mortgage services of Guarantee rate is 600 while for USDA mortgage it is 620.
These are lower than the average credit score requirements. It offers online services along with a branch presence in all 50 states of the country.
The downside of this platform is the slow pre-approval time that may take a day or even two for turnover.
- PNC Bank
Another refinancing platform ranking among top home loan refinance companies is PNC bank, which offers low-interest rates.
The pre-approval application is entirely digital, with a quick turnaround time of 20 to 30 minutes.
It has its presence across the country in all states with a branch presence in several states.
It offers a wide of loans, including conventional, VA, FHA, Jumbo, ARM, and home equity loans, except for USDA loans.
The borrower must have a minimum score of 620 for qualifying for the loan. In the case of a Jumbo loan, it requires a minimum of 700 credit score.
It also provides several discount programs to borrowers and is a customer-friendly platform.
Requirements for Refinancing Loans
The refinancing of home loans has specified requirements that a borrower must meet to qualify for refinancing.
The process starts with applying for loan refinancing same as when you borrow a loan.
Once you duly fill in the application, it is then reviewed by your lender. He then verifies you on several factors.
The verification criteria may differ from lender to lender, but it usually consists of the following factors.
- Credit score
- Debt-to-income ratio (DTI)
- Borrower’s income
- Current employment
- Loan-to-value ratio (LTV)
- Credit report
Besides the factors mentioned above, an important piece of information that a lender verifies is the home’s current value for which the refinancing has been requested.
The verification requirements may vary with different home loan refinance companies as per the mortgage requested by the borrower.
An easy method to check your eligibility for a mortgage refinancing is by getting pre-approval offered by most companies.
The online platforms facilitate borrowers with quick service for the initial process of pre-approval.
Even the rest of the process has become quite speedy and convenient with the inclusion of technology in it.
How Does Loan Refinancing Benefits Borrowers?
Refinancing your home loan can benefit you in several ways as a borrower. Besides helping you get easy and quick access to your purchased home, it has some other benefits discussed below.
- Refinancing helps lower the regular monthly mortgage payment for a borrower by allowing him to expand the loan repayment period.
- Mortgage refinancing usually reduces the interest rate compared to the previous loan.
- Refinancing gives you the freedom to design your repayment interest rate as fixed or adjustable.
Things to Remember
Hiring services from some home loan refinance companies may sound fancy and compel you to try to test it; there are several things that must be kept in mind.
Mortgage refinancing is not everybody’s cup of tea and, if not executed well, can cause trouble for the borrower. Besides meeting the requirements and fulfilling the eligibility criteria, the following are the things to remember.
- Refinancing loans may not always render you the desired results. Refinancing also involves the risk that may affect borrowers if not planned well.
- A low-interest rate does not always mean that you are saving costs. There are several other charges involved in refinancing, such as originating fee, application charges, closing cost, etc., that must be included in the total cost when computing the interest rate. You might grab an offer for a lower interest rate and end up spending more in other areas.
- After thorough research and planning, switching from one type of loan to another must be done. Every loan has its specifications in terms of interest rate and repayment schedule. You must know these factors when switching the mortgage type.
- There lies a risk of increasing the market interest rate that can put borrowers seeking to refinance in hot waters. They may have to pay more interest than the actual loan.
Refinancing home loans can be a good idea only when it is needed. A borrower must first analyze his refinancing goals and choose the right plan for himself.
There is a wide range of home loan refinance companies to choose from, as per the need and convenience.
Besides reaping the benefits, you must also realize the risk associated with refinancing to prevent it from becoming a hurdle in the way of your goals.