Right now, there are still 11.5 million homeowners who have a 30-year mortgage rate that is 0.75% or more above today’s rates. If you’re one of those millions, you could stand to save thousands of dollars in interest or free up monthly cash flow with a refinance.
A year and a half ago, mortgage rates began plummeting to historically low levels. Since then, 8.8 million households took advantage of a rate and term refinance, according to a recent report by mortgage data firm Black Knight.
To make sure you’re getting the best deal possible, you’ll want to choose the best mortgage refinance lender for your specific situation. The Consumer Financial Protections Bureau (CFPB) cites a variant of 0.5% between mortgage rates with different lenders for two similar candidates. That’s why it’s imperative you shop and compare a few mortgage lenders.
It’s not just about the rate, though. Finding a refinance lender with transparent pricing, online conveniences, accessibility to most borrowers, an extensive product offering, and a reputable history with customer satisfaction are important qualities, too.
Deciding which mortgage refinance lender is the best choice is a challenge with so many options available. To help you navigate the process, NextAdvisor reviewed 36 different refinance lenders and scored each one on categories including transparency, accessibility, online convenience, loan product variety, and customer satisfaction. We then narrowed down the list to the following list of the best mortgage refinance lenders of 2021.
As with all of our mortgage lender reviews, our analysis is not influenced by any partnerships or advertising relationships. For more information about our scoring methodology, click here.
Best Mortgage Refinance Lenders of 2021
- Rocket Mortgage, 4.6/5 Stars
- Truist Mortgage Lender, 4.5/5 Stars
- Sebonic Financial, 4.5/5 Stars
- Pennymac Mortgage, 4.5/5 Stars
- Better Mortgages, 4.4/5 Stars
- AimLoan Mortgages, 4.4/5 Stars
1. Rocket Mortgage, 4.6/5 Stars
Rocket mortgage is the online lender for Quicken Loans and is one of the largest mortgage lenders in the U.S. We ranked the Detroit-based company as one of the best mortgage refinance lenders of 2021 because of its simple online application process, large nationwide footprint, low level of consumer complaints, the transparency and accessibility of its rates and fees, and the company’s wide offering of mortgage loan products, including refinance products.
Refinance products offered:
Rocket Mortgage’s Standout Feature: Rocket Mortgage stands out for the company’s high level of customer satisfaction. Rocket Mortgage originated over one million loans in 2020, making it the largest lender we reviewed by total volume. Despite its magnitude, the company has lower-than-average consumer complaints registered on the Consumer Protection Financial Bureau’s (CFPB) consumer complaint database. We found 0.48 complaints per 1,000 loans — or less than half a complaint per 1,000 loans occurred. This figure is very low compared to the average complaint ratio of 2 complaints per 1,000 loans among other lenders we reviewed.
2. Truist Bank, 4.5/5 Stars
Truist Bank, now merged with Suntrust and BB&T under its name, has an extensive footprint across the U.S. through its thousands of brick-and-mortar branches and online presence. Along with the company’s solid menu of purchase and refinance products, easy-to-use online application process, transparency of rate and fee information, and average number of complaints compared to other reviewed refinance lenders, the brand’s website is easy to navigate with several useful resources to help with the refinance borrowing process, such as calculators, videos, and sample mortgages.
Refinance products offered:
Truist Bank’s Standout Feature: Truist offers a comprehensive menu of online or in-person banking accounts such as checking, savings, money market, and CDs. If you are in the market for a bank, looking to switch banks, or already have a Truist account, there is an allure of convenience to refinance through the same institution. Some lending institutions also give incentives or discounts to existing account holders.
3. Sebonic Financial, 4.5/5 Stars
Sebonic Financial is the mortgage lender division of North Carolina-headquartered Cardinal Financial. Sebonic Financial scored well with NextAdvisor because of the company’s high-end digital borrowing experience, full mortgage product lineup which is available in all 50 states, and the lender’s history of below-average customer complaints with the CFPB. Based on 2020 data, Sebonic has less than one complaint per 1,000 loans originated in the same year. Although Sebonic’s mortgage rates and fees are not listed on the company website, the online system, Octane, makes it easy to access a refinance quote without a credit check or drawn-out process.
Refinance products offered:
Sebonic Financial’s Standout Feature: Sebonic’s proprietary borrowing platform, Octane, is a standout feature. With Octane, borrowers can get a fast rate quote, start an application, upload documents, and sign closing documents, with real-time updates along the way. We found Octane to be one of the best online application processes compared to other lenders we’ve reviewed. It’s easy-to-use, high-tech, and we appreciate the ability to have a full-online digital experience with the option to speak to loan officers.
4. PennyMac Loan Services, 4.5/5 Stars
PennyMac Loan Services isn’t a well-known name. But the California-based mortgage lender stands out for its convenient online application process, ability to get a rate quote without a credit check, transparency of rates and fees, and low frequency of consumer complaints with the CFPB. In 2020, the CFPB reported less than 0.30 complaints per 1,000 loans. Pennymac offers a wide menu of refinance products in 49 states, with 16 brick-and-mortar branch locations.
Pennymac does not carry niche products such as renovation loans, jumbo mortgages, and reverse mortgages, but provides all three government-backed loans (FHA, VA, and USDA), conventional, ARM, and refinancing loans.
Refinance products offered:
- Cash-out refinance
- Rate-and-term refinance
- VA Interest Rate Reduction Refinance (IRRRL)
- FHA streamline
- USDA Streamlined Assist Refinance
PennyMac’s Standout Feature: The brand had one of the lowest complaint ratios among lenders we reviewed, but the more noticeable standout feature is the overall online experience. At NextAdvisor, we value price transparency and accessibility. PennyMac met this expectation with daily rate and fee updates and customizable refinance rate quotes on its user-friendly webpage.
5. Better Mortgages, 4.4/5 Stars
Better Mortgage is an entirely online mortgage lender based out of New York City. The company is named one of NextAdvisor’s best mortgage refinance lenders of 2021 because of its money-saving incentives and streamlined application platform. Borrowers can get a fast online mortgage preapproval in minutes on most major loan types in 46 states. The company doesn’t offer as many products as its competitors, such as VA or FHA refinance loans. But it makes up for a limited menu with customer incentives. Better’s rate and fee information is accessible through its website, and the CFPB reports a below-average rate of consumer complaints in 2020 (1 complaint per 1,000 loans).
Refinance products offered:
Better Mortgage Standout Feature: Better has unique cash incentives up to $2,000 if Better doesn’t close a refinance loan in time. Better will also give you $100 if it can’t beat or match a competitor’s Loan Estimate.
6. AimLoan Mortgages, 4.4/5 Stars
AimLoan (American Internet Mortgage) originates mortgages in all 50 states and offers a limited refinance menu. AimLoans does not offer government-backed refinance loans (i.e., VA IRRRL or FHA Streamline Refinance) like some of its competitors. It received an average number of consumer complaints with the CFPB (2.2 complaints per 1,000 loans). Yet the brand is named one of NextAdvisor’s top mortgage refinance lenders of 2021 because the company received top scores with online convenience, transparency of rate and fees, and nationwide availability. Potential refinancers can obtain a customized rate quote with up-to-date lender fees without going through a full application or credit check.
Refinance products offered:
AimLoan’s Standout Feature: AimLoan has a high level of pricing transparency. The company’s rates and fees are accessible on its webpage. What stands out most is the guarantee of closing costs at the time of application. Compared to other reviewed mortgage lenders, this isn’t typical. Usually, closing costs are an estimated percentage and unknown until the closing worksheet is completed, which is well into the refinance process.
Honorable Mention: Navy Federal Credit Union, 4.8/5 Stars
Navy Federal Credit Union was the highest-scoring lender by NextAdvisor. It received maximum points with nationwide availability, price transparency, online convenience, and loan product variety. It has a slightly above average complaint ratio of 2.8 complaints per 1,000 loans.
This lender offers flexible credit requirements on most refinances to qualified military service members and their families. Navy Federal Credit Union offers a unique relock rate option if your quoted rate improves. Navy Federal Credit Union’s footprint is nationwide but only lends to eligible military families. The lender is worth an honorable mention since military members and families that bank with Navy Federal Credit Union will find it a leading option. But since its availability is limited, it didn’t make the best of list.
Refinance products offered:
Honorable Mention: Costco Mortgage Program, Not Rated
The Costco mortgage program does not originate mortgages, so it was not included in the list of best mortgage refinance lenders. However, the useful marketplace is worth an honorable mention. Costco members have access to a network of participating mortgage lenders offering discounts and incentives for borrowing through this channel. Through the Costco mortgage marketplace website, you can fill out a universal application, compare loan offers, and cash-in on discounts or lender fees if you choose a lender through this program. The marketplace platform is easy to navigate with transparent pricing and terms. You can get a rate quote online in minutes and will only be contacted by the lender with your expressed permission.
Refinance products offered:
Types of Refinance Options
A cash-out refinance is when you get a new mortgage loan and use it to pay off the existing loan, except you borrow more than what you owe and take cash for the difference. The point of a cash-out refinance is to access a lump sum of money. Common reasons to do a cash-out refinance are to pay down high-interest debt, like credit cards, or fund a worthwhile home improvement project.
Keep in mind, cash-out loans usually have higher interest rates and will likely increase a monthly mortgage payment.
A rate-and-term refinance is when you pay off the current loans with a new loan with a new rate and term. The primary purpose of a rate-and-term refinance is to lower the original interest rate and lower the monthly mortgage payment. Freeing up monthly cash flow can help borrowers pay down other debts, save for emergencies, or invest in retirement.
A rate-and-term refinance will either lengthen the loan term, for example:
- Replace a 30-year loan that’s been paid down by five years with another 30-year loan. This will extend the loan’s payoff timeline.
- Replace a 30-year loan with a shorter term, like a 15-year loan. This tactic will shorten the loan’s life and debt timeline while reducing overall paid interest.
VA Interest Rate Reduction Refinance Loan (IRRRL)
Veteran (VA) loan holders can utilize a VA Interest Rate Reduction Refinance Loan (IRRRL) to lower their interest rate and monthly payment. VA IRRRL typically requires less paperwork and sometimes lower standards to prove creditworthiness.
In addition to closing costs, IRRRL has a 0.5% funding fee. Depending on the situation, such as creditworthiness and equity status, it may be worth seeing if a VA loan could benefit from refinancing into a conventional mortgage to avoid the funding fee.
FHA Streamline Refinance
Similar to the VA IRRRL, borrowers with an FHA mortgage can use the FHA Streamline Refinance to take advantage of a lower rate with less-than-typical paperwork and credit verification standards.
USDA Streamlined Assist Refinance
A USDA streamlined assist refinance gives USDA home loans borrowers with low equity the opportunity to refinance into more favorable payment terms. Like the VA and FHA streamline programs, it allows USDA loans to be refinanced with a lower burden of proof on documentation and creditworthiness.
How to Find the Best Mortgage Refinance Lender
Outside of price and lender reliability, narrowing down your choice comes down to what is best for you and your personal circumstances. Depending on your goals and needs as a borrower, one lender could be a better fit than another. Here is what to consider:
Each lender may specialize in certain types of refinance loans. For example, if you are refinancing from an FHA loan into a conventional loan you’ll want a lender with the expertise and ability to service this type of refinance.
Trust and Comfortability
You never want to feel pressured into making a loan choice you’re not comfortable with. Settle on a lender that makes you feel comfortable with each financial decision.
Refinancing With Existing Bank or Lender
Sometimes refinancing with the same lender that originated your previous loan may offer discounts or incentives for refinancing with them. Also, some banks offer incentives or discounts if you also have an account with them, such as a checking, savings, money market, or CDs.
For example, people with an existing mortgage or a personal checking account with U.S. Bank, could save 0.25% on closing costs (up to $1,000) with a refinance through the company.
Inquiring about refinancing with your existing bank and your previous lender is a great place to start. But don’t stop there. Compare at least two to three quotes from various lenders to make sure you get the best deal.
Why It’s Important to Shop Mortgage Refinance Lenders
It’s important to compare offers from a variety of refinance lenders because each will evaluate your financial situation differently. To secure the best rate, fees, and terms for your situation, most financial experts recommend comparing at least two to three different quotes. Here is what to consider:
Comparing Rates With Different Refinance Lenders
The interest rate you end up with is heavily influenced by your credit history, loan-to-value (LTV), debt-to-income ratio (DTI), and income. But finding the best rate can also be influenced by the lender itself. That’s why getting multiple quotes is in your best interest. A difference of 0.50% doesn’t sound like a lot but can save you thousands of dollars over the loan’s life.
To illustrate the benefits of refinancing, here’s an example:
- 30-year fixed
- 4.25% interest rate
- $400,000 loan
- 10% down payment
- According to the NextAdvisor mortgage calculator, after three years, the loan balance remaining is $340,500.
Here is what a new 30-year refinance loan at 3% interest would look like:
|LOAN BALANCE||INTEREST RATE||MONTHLY PRINCIPAL AND INTEREST||TOTAL INTEREST REMAINING|
|New Loan After Refinance||$340,500||3%||$1,435||$176,400|
With this example, taking out a new 30-year loan with a lower interest rate of 3% lowers the monthly payment by $335 and you’d pay $55,600 less in total interest.
Comparing Closing Fees With Different Refinance Lenders
Securing the lowest interest rate isn’t the only factor you need to consider when comparing mortgage refinance lenders. Two lenders can advertise the same interest rate but charge wildly different closing fees. A low rate with high closing costs can eat away at the savings you thought the low rate provided.
Consider this example on a 30-year fixed, $200,00 loan:
|Loan Amount||Interest Rate||Closing Costs||APR|
Loan A is the more tempting offer since it has a lower interest rate, but higher lender fees. Loan B may be overlooked because of its higher interest rate. But it has lower lender fees and a lower overall APR.
When comparing offers, the best apple-to-apples comparison is comparing the APR on each Loan Estimate. The best approach is to do plenty of research, narrow it down to a list of two to three, get prequalified with each, and compare the Loan Estimates side by side.
Don’t wait too long in between applications, though. According to Experian, multiple hard credit inquiries related to mortgages are counted once in a 30-day period.
For more information on specific refinance lenders, NextAdvisor has an extensive library of mortgage refinance lender reviews here.
How We Chose the Best Mortgage Refinance Lenders
To find the best mortgage refinance lenders of 2021, we first looked at all the mortgage lenders NextAdvisor has reviewed so far. The lenders chosen to be reviewed are based on consumer search interest. To narrow the list to the best mortgage refinance lenders, we developed a scoring framework using a weighted average score between 0 and 5, with more weight awarded to the criteria we determined to be the most important.
Our list doesn’t take into account key financial factors like mortgage rates, APRs, and fees, because those depend on market conditions and your individual creditworthiness. Instead of focusing on those numbers, it’s best to first determine the qualities you want in a lender and how to find the best mortgage rates. Then you’ll be prepared to find the best lender for you.
The factors we used to evaluate the best mortgage lenders:
- Online Convenience: A lender is scored 1 through 5 based on the company’s online application experience. A 5 is awarded if the company’s mortgage application can be completed fully online with a streamlined process, including uploading documents and a customized rate quote. A lower score is awarded if additional phone calls are needed to process an application or for a poor online user experience.
- Transparency: Lenders are scored 0 through 5 based on the accessibility and transparency of mortgage rates, lender fees, and credit check requirements for rates and/or fees. A 5 is awarded if the lender advertises rates and fees on its websites and doesn’t require a hard credit check to get rates and/or fees. Conversely, a lower score is awarded when consumers cannot easily access rate and fee information and/or must go through a hard credit check to access them.
- Nationwide Availability: Lenders are scored 1 through 5 based on the company’s geographical footprint. A lender can score a 5 if it operates in all 50 U.S. States.
- Loan Product Variety: Lenders are scored 1 through 5 based on their loan product menu and variety of products offered. A high score of 5 is given if most or all mortgage products are available, with a lower score awarded for a limited mortgage menu.
- Customer Satisfaction: To measure customer satisfaction, we reviewed the number of complaints filed against each lender with the Consumer Financial Protection Bureau in 2020. We divided the total consumer complaints with the total number of loans originated over the same time period to get a complaint ratio per 1,000 loans originated. We sourced the total loans originated using publicly accessible data provided under the Home Mortgage Disclosure Act and regulated by the Federal Financial Institutions Examination Council (FFIEC).