Best Refinancing Companies for 2023

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SunTrust Mortgage

SunTrust Mortgage

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Editor's Take

On average, people who choose SunTrust Mortgage to refinance save about $314 a month. The rates are competitive and low, and if you find a better rate elsewhere, they’ll match it. You can also choose from a variety of loan products when working through SunTrust, including USDA, VA, conventional, and FHA. You choose which rate option you like best by opting for either fixed or adjustable.

SunTrust has one of the best online portals on the market. It’s packed with both tools and educational content. One downside to working with SunTrust, however, is that it doesn’t consider alternative credit data when reviewing applications, unlike many of its competitors.

Loan Features

  • Minimum Credit Score
    620
  • Fixed and Adjustable
    Yes
  • Offers multiple loan types
    Yes

Details

  • Great online portal
  • Can call, email or go online for current rates
  • $0 closing costs

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Guaranteed Rate

Guaranteed Rate

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Editor's Take

Guaranteed Rate is an easy lender to work with as long as you have a decent credit score (620 minimum) and a consistent source of income. They offer conventional, VA, and FHA loans, and you can get approved to refinance entirely online. If you’re not sure which loan product to choose, Guaranteed Rate will explain the pros and cons of every option.

Loan Features

  • Minimum Credit Score
    620
  • Fixed and Adjustable
    Yes
  • Offers multiple loan types
    Yes

Details

  • Works with a variety of incomes
  • Can be done online
  • 95% customer satisfaction

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Alliant Credit Union

Alliant Credit Union

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Editor's Take

Alliant helps people save money by helping them remove PMI payments with as little as 5% equity in their house. When you become a customer, you get access to a variety of different banking and mortgage tools to help you take control of your financials. Alliant is also known for having exceptional customer service for both current and prospective clients.

Loan Features

  • Minimum Credit Score
    NA
  • Fixed and Adjustable
    Yes
  • Offers multiple loan types
    No

Details

  • Great online banking tools
  • Great customer service
  • Only has physical locations in 5 states

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Refinancing Explained

Refinancing your mortgage entails paying off your original home loan by replacing it with a new loan featuring different terms. Many homeowners do this in order to lower their monthly payments, which can be done in a number of different ways – some of which offer better long-term benefits than others.

In some cases, you might qualify for a lower loan rate. This could serve you well in a couple of different ways. First, a lower rate can decrease your monthly mortgage payment, allowing you to divert that money elsewhere in your budget or savings plan. Next, you’ll pay less money in interest over time. Over the course of a 30-year mortgage, that adds up to a lot of savings.

Another way to get a lower monthly payment is by extending your loan term. For example, say you bought your house five years ago with a 30-year mortgage; you’re now down to just 25 years of payments left. You could refinance your mortgage to start over at 30 years.

You now have a lower loan amount after five years of payments, and by stretching it out over a longer period, you’ll reduce those payments each month. On the downside, you’ll end up paying more money in interest over the long run.

Closing Costs

Just like a regular mortgage, you’ll have to pay closing costs to your lender as part of a refinance. When calculating your potential savings with a refinance, you need to consider these extra costs.

Saving $40 a month may not feel like a lot compared to a few thousand dollars you may pay at closing.

If you plan on staying in your house for a long time, however, even small monthly savings may be worth it. Figure out when you’d break even on your costs vs. savings, then see if you picture yourself in the home at that point in your life.

Cashout Refinance

In addition to refinancing with the purpose of changing your monthly payment, you can also apply for a cashout refinance if you have enough equity in your home. This product not only pays off your original mortgage with new loan terms, it also gives you a lump sum based on your home equity, that is then rolled into the new loan amount.

When to Refinance Your Mortgage

Because refinancing comes with both pros and cons that vary by situation, here are a few instances where it can be most helpful. If any of these situations apply to you, you should at least look into refinancing more closely to see if you could benefit.

When Interest Rates Drop

Up until recently, interest rates have been slowly but steadily rising from the all-time low experienced in the aftermath of the Great Recession. But the Federal Reserve recently reversed course and has placed a hiatus on rate hikes for the rest of the year – at a minimum.

Some analysts even predict another rate cut in either 2019 or 2020. That part is conjecture, but if you recently purchased a home after a rate increase, you may find that rates have mellowed out, which could equate to substantial savings.

When Your Credit Score Jumps

Perhaps you’ve been steadily working to improve your credit score, or paid off a large credit card balance and noticed a major boost. If you qualified your mortgage with less-than-excellent credit and have now jumped into a different credit category, you could qualify for a much better rate.

When You Can’t Afford Your Monthly Payments

Maybe you could afford your home when you first moved in, but your circumstances have changed. Whether you lost your job, had a serious illness, or went through a divorce, life changes and so do our financial abilities.

In some cases, you may want to consider refinancing to extend the length of your mortgage and lower your payments in order to stay in your house. This can have major long-term implications for your finances, especially if you’re older and refinancing to a 30-year mortgage. But it’s still an option if you feel backed into a corner.

You Qualify to Drop PMI

Private Mortgage Insurance (PMI) is a hefty fee that’s included in your monthly payments when you don’t make a full 20% down payment. Once you have 20% equity in your home, you may be able to drop off that charge with a refinance. Because home values are rising across the country, it’s taking less time for homeowners to reach that equity threshold.

With a conventional loan, you may be able to get your PMI dropped without refinancing – simply ask your lender. If you have an FHA loan, however, you’ll likely need to completely refinance the loan in order to get rid of your PMI.

What You Need in Order to Refinance

Refinancing is almost as complicated as getting a new mortgage, but at least you won’t have to deal with sellers throughout the process. Here’s some basic documentation you’ll likely need as part of the application process:

  • Recent paystubs and bank statements
  • Tax returns from the last two years
  • Credit report (requested by the lender)
  • Statements of debts and assets

The refinancing process also requires a home appraisal to confirm the value of your property. Most lenders require that you pay this fee upfront, although some may include it in the closing costs.

Frequently Asked Questions

How much are closing costs?

Closing costs are estimated as a percentage of the new loan amount and currently average around 1.5%. That means a mortgage of $250,000 would cost about $3,750 for closing, although you may be able to roll those fees into the new loan.

How soon can you refinance your mortgage?

Most lenders require you to wait at least four to six months from the time you purchase your home to refinancing. You may be able to get around this wait by choosing a different lender or changing your loan type.

CHow long does refinancing take?

The timeline varies by lender, but is usually shorter than a regular mortgage. Most lenders advertise closing refinances between 20 and 45 days. The season may also impact how fast you can get it done.

Can you qualify with bad credit?

Lenders offering refinancing use the same lending standards as they do for standard home loans. If your credit score is on the rise, however, you may still qualify, especially if you get a government-backed loan.

Refinance Your Mortgage Today

Refinancing could save you money on your monthly payments. Get a quote today to see how much!

Call Now! (800) 634-7928

with our top pick SunTrust Mortgage

by Lauren Ward

Personal Finance Writer

Lauren Ward is a personal finance writer with nearly ten years of experience covering topics like loans, credit, and real estate. She lives in Virginia with her husband and three children.

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