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Top Mortgage Refinance of 2022

Take advantage of lower mortgage rates & make your monthly payments more affordable.

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One of the best reasons to refinance is to lower the interest rate of your mortgage. Refinancing can not only help you save money, it can also help you build equity in your home faster and lower your monthly payments. Getting pre-qualified won't affect your credit score - see how much refinancing could save you now.
Best Overall
Figure Student Loan Refinance Logo
  • Take advantage of historically low interest rates
  • Easily see your rate in a few minutes
  • 100% online application done from the comfort of your home
  • Good/excellent credit needed

Why refinance your mortgage?

There are a number of different reasons to refinance a mortgage. This could include saving money or reducing your mortgage term length. Here are a few of the primary reasons you might consider a refinance:

  • Get a better interest rate: You might qualify for a lower interest rate because rates are down in general or you’ve improved your credit score. A lower interest rate could help reduce your monthly payment amounts.
  • Get a shorter term length: Reducing the length of your loan could mean you pay less in interest charges over the life of the loan and you might qualify for a lower interest rate too. Plus, you’ll be out of mortgage debt that much sooner.
  • Get cash from equity: If you’ve built up enough home equity — the current value of your home minus how much you still owe — you could do a cash-out refinance to get money for other reasons. This might include home renovations or adding to a college fund.
  • Get rid of mortgage insurance: Depending on your loan type, refinancing could help you remove the requirement for private mortgage insurance (PMI). In fact, refinancing might be your only option to remove PMI if you have an FHA loan.
  • Get rid of an adjustable interest rate: A mortgage with an adjustable interest rate has an interest rate that can periodically change, which affects your monthly mortgage payments and overall interest expense. If you’re not comfortable with this uncertainty, you might consider a refinance to switch your adjustable rate to a fixed interest rate.

Common refinance requirements

Here are some common requirements you likely have to meet to qualify for a mortgage refinance:

  • Credit score and credit history: Different types of loan refinances have different credit score requirements. For example, you need at least a 580 credit score to qualify for an FHA cash-out refinance, but a 620 credit score is often required for a conventional loan refinance. The higher your credit score, the higher your likelihood of qualifying for more competitive interest rates.
  • Debt-to-income ratio: Your debt-to-income ratio (DTI) is your total monthly debt divided by your gross monthly income. Lenders use this ratio to help predict your ability to make your mortgage payments. It is recommended that you aim for a DTI of 43% or lower, though the exact requirements could vary by lender and some may accept a higher DTI.
  • Current income and employment: Most lenders require proof of income, which could include copies of your W-2s, tax returns, 1099 forms, or pay stubs.
  • Current loan-to-value ratio: Certain lenders and loan types require you to have at least 20% home equity to qualify for a refinance.
  • Waiting period: Certain loans require a waiting period before you can refinance. This means you have to wait a specific amount of time, which could be six months or more, after closing on a mortgage loan before you can refinance it.

Types of mortgage refinance

The smartest mortgage refinance option for you depends on your situation and financial goals. Here are a few popular types of refinancing options:

  • Standard refinance: Also known as a rate-and-term refinance, this option is used for changing interest rates or loan terms. If you want a lower interest rate, shorter loan length, or longer loan length, this refinance option could make sense for you.
  • Cash-out refinance: This option replaces your mortgage with a new loan balance that’s larger than your original loan. You receive the difference as cash to do with as you please, but this is often used for home improvements.
  • Streamlined refinance: This refinancing option doesn’t typically require the same number of steps needed in a regular mortgage process, such as additional documentation and underwriting. Streamlined refinancing is available for FHA, VA, and USDA loans.
  • Jumbo refinance: This option is available for large amounts of money above conventional loan amounts. Jumbo refinances may also have additional requirements above a standard mortgage loan refinance.

Choosing a refinance lender

It might feel easiest to stick with your current lender when refinancing, but that doesn’t mean it will be the smartest option for you. To find the deal that works the best for your situation, consider refinance options from multiple lenders. Shopping around can help you compare rates, terms, and fees from different banks, credit unions, and other financial institutions.

Here are a few factors to consider when comparing offers:

  • Origination fee: A fee a lender charges for processing your loan. The origination fee can vary from lender to lender, but it is sometimes negotiable.
  • Annual percentage rate: The annual percentage rate (APR) is the sum of your interest rate plus additional costs, such as fees and other charges.
  • Monthly payment: How much you pay toward your mortgage each month, including interest.
  • Loan type: Make sure all the quotes you get are for the type of loan you want to take out. This could be a standard loan, cash-out loan, streamlined loan, etc.
  • Lender type: Common lenders include banks and credit unions. You may find, as you compare refinancing options, you prefer the personalized and friendly feel of a credit union or the features and convenience of a bank.

Remember to compare apples to apples when looking at different offers and lenders. For example, it would make sense to compare cash-out refinancing options between two different lenders, but not a cash-out refinance from one lender and a jumbo refinance from another.

FAQs

Does refinancing hurt your credit score?

Refinancing could impact your credit score in multiple ways. Hard credit inquiries from lenders checking your credit history could cause a small dip in your credit score, though your score is likely to recover quickly if you make on-time and in-full loan payments.

In addition, refinancing a loan will close your original loan and start a new one. Closing a loan could lower the average age of all your credit accounts, which is a factor in certain credit scoring models. That said, if refinancing is advantageous to your personal finances, it could also have positive impacts to your credit score over time as well.

How long does it take to refinance?

Refinancing a mortgage loan typically takes 30 to 45 days, but this number could vary depending on appraisals, inspections, paperwork, and other factors. To potentially speed up the process, be prepared with the required documentation, such as proof of income like W-2s or pay stubs.

How often can you refinance a mortgage?

There’s technically no limit to how many times you can refinance a mortgage, but how quickly you can refinance varies depending on your lender and loan type. Some loans or lenders might require you to wait anywhere between six to 24 months before you can refinance. Also keep in mind that you might have to pay fees each time you refinance, which could include closing costs, origination fees, appraisal fees, and inspection fees.

Should I just refinance with my current lender?

Refinancing with your current lender could be a good idea and it might feel easier than looking into other lenders. But shopping around for options between different lenders is the recommended way to find the best deal for your situation. Remember to compare similar options between lenders to get the most fair comparison of what’s available.

Bottom line

Closing on a home mortgage loan is a big deal and something to be celebrated. But you might find you have more competitive financing opportunities arise later on when you look into a refinance. This could include getting a more competitive interest rate or receiving cash you can use for important financial goals.

Because mortgage refinancing options can vary, it’s important to compare offers from different lenders so you can find a deal that works for you.

Best Overall
Figure Student Loan Refinance Logo
  • Take advantage of historically low interest rates
  • Easily see your rate in a few minutes
  • 100% online application done from the comfort of your home
  • Good/excellent credit needed