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Who Are the Best Mortgage Lenders for Refinancing?

You’ve decided to refinance your mortgage loan. You’ve crunched the numbers and know it could be of benefit. It could even lower your monthly payments and give you a little extra spending money to help with expenses. So, how do you find the best mortgage lender for refinancing your home loan?

Refinancing your existing home loan can benefit you in many ways. Deciding if now is the right time should be based on your current financial situation and future life goals. Refinancing is a great way to lower your monthly payments and potentially access your home equity. Want to remodel the kitchen or pay off credit card debt? Refinancing makes it doable.

Think refinancing may be right for you? We have a few tips to help you find a mortgage lender that will suit your needs.

What Is Mortgage Refinancing?

Mortgage refinancing is a fairly straightforward concept. If you have an existing mortgage and wish to negotiate the terms or have an infusion of cash, refinancing can help you meet your goals.

There are two different types of mortgage refinancing.

The first is called a cash-out refinance. This occurs when you’ve built up equity in your home. It gives you a chance to refinance into a different loan with different interest rates and terms and receive a check at closing. Depending on the amount of equity you’ve built up, this check can allow you to consolidate debt, remodel your home, or pay for other significant expenses that life sometimes throws your way.

The second is called a rate-and-term refinance. This allows the homeowner to work with a mortgage lender to receive a lower rate and a new term length from the original contract. You get a new loan. Pay off your old mortgage, and then make payments based on your new rate and term. A rate-and-term refinance can give you more or less time to pay off your loan, provide you with a lower interest rate, or set up different monthly payments that give you a better handle on your monthly expenses.

Is Mortgage Refinancing a Good Idea?

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Mortgage refinancing can be a good idea at any time if it’s right for you. It’s really going to depend on your financial situation.

If you have an adjustable-rate mortgage, a refinance can allow you to move to a fixed rate so that your monthly payments will be predictable for the life of the loan.

If you have dreams of paying off your mortgage, switching out the terms could allow you to pay off your mortgage faster. If you still have 22 years left on your current mortgage, reducing it to a 15-year home loan can speed up the process of paying it off and decrease the amount of interest you pay overall.

Or maybe now is the time to create the home of your dreams. You love your neighborhood. You love your house. But the kitchen could use an upgrade. Refinance it to access the funding necessary to build out your dream.

With all of the upsides to refinancing, what are you waiting for?

How To Find the Best Mortgage Lender

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Ask a dozen people what their dream home looks like, and you’ll hear a dozen different answers. It’s similar to finding a mortgage lender for refinancing; everyone has different goals and needs.

As you dive into the process, you’ll find that a variety of organizations have refinancing programs. Finance companies, banks, and credit unions are just a few of the lending firms vying for your attention.

And in many ways, they are similar. Financing companies, banks, and credit unions all offer home loans, auto loans, and refinancing options. Where they differ is in customer service, personal experience, and company goals.

Finance companies and banks work hard to maximize their profits. They prioritize decisions that benefit their shareholders.

Credit unions take a different approach. They operate as not-for-profit institutions that reward their members with benefits, such as better interest rates and lower fees.

Many homeowners find working with a credit union more satisfying because of the personalized customer service experience. Credit unions also service the loan its entire lifetime, meaning they won’t sell it to another entity. If you have a question, it’s an easy process to find the answer. Just call or stop by.

What Costs Are Involved With a Refinance?

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When you refinance, the mortgage lender will have a variety of fees to close the loan. They can include:

  • Application fee
  • Origination fee
  • Processing fee
  • Appraisal fee

These fees are usually paid out of pocket at the time of closing. Some lenders allow you to roll them up into the new loan, though this may reduce the size of the check you receive on a cash-out loan.

This is where it pays to compare mortgage lenders. Some are more transparent with their loan pricing, offering flat fees rather than percentages. For example, Solarity Credit Union offers a flat fee loan origination of $1,495 rather than a 1 percent fee, which is common in other lending institutions. On a $300,000 loan, that would cut your loan origination fee in half, down from $3,000.

Final Thoughts on Finding a Mortgage Lender for Refinancing

The first step for any home loan or refinance is to see if you qualify. For a cash-out refinance, you’ll need a significant amount of equity to qualify for the loan. You’ll need to determine the difference between how much is still owed on your current mortgage and how much your home is currently worth.

You’ll also need to consider closing costs. Just like when you first purchased your home, you’ll be required to pay closing costs of about 2 to 6 percent of the total value of the loan to the lender at the time of closing. If you have plans to move in the coming months, a refinance may not be optimal, as you likely won’t have a chance to break even before you move.

Then it’s time to choose a lender, submit an application, and start the process. Working with the best mortgage lender in your area will ensure your refinance runs smoothly from beginning to end. What are you waiting for? Submit your application today.


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