Best Mortgage Lenders for Refinancing

Assess Your Current Needs

When choosing a lender, you need to understand if your needs fall outside of the “traditional” lending boundaries (e.g. poor credit, high debts, need non-QM product) to effectively pair yourself with the right lender that can cater to your specific circumstances and offer a better experience.

If you’ve got great credit and other credentials, the refinancing world is wide open to you, but if you fall outside today’s lending standards, you’ll need to dig a little deeper.

For example, if someone who has what is considered bad credit wanted to refinance their home they might need to find a lender that would allow them to either file with a non-occupying co-borrower; as an alternative, they might need to find an FHA approved lender and learn what their guidelines are. On the other hand, if you do have what is considered a passable (620 to 660) or good credit score (661 to 780) you’ll most likely not have a hard time finding a refinancing lender considering that the majority of lenders are able to provide loans with a credit score of 620 and above.

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Check With Your Existing Lender

It’s possible that refinancing with your existing lender may be a better option than using a new lender due to a few reasons including:

• They already have all of your current loan information on file (e.g. past payments, income, borrowers history, etc.) so the process may move quicker
• You could qualify for discounts due to having an existing checking or savings account
• They may offer competitive rates to keep you as a client

Although there are a few upsides to using your current lender for mortgage refinancing, there can also be a few downsides as well like:

• A longer closing timeline if you’re with a popular lender (due to refinancing being the highest it’s been in 14 years)
• They know your current rate and may offer terms just slightly under your current rate not necessarily giving you the best rate you can get
• It’s possible that you may have a better customer experience with another lender. For example, if you prefer limited interaction and like to handle business online, having an online lender that enables self-service is important. If you’d prefer customer service that involves interacting with someone, having a lender that provides phone or in-person assistance is important. Your existing lender may only be a mortgage servicer and not actually offer mortgages.

But, just because you’ve done business with your current lender doesn’t mean you shouldn’t be as thorough about the process as if you were working with a new lender. Checking things like terms, closing costs and timelines are still important as determining whether you’re getting the best deal possible.

Increase Your Credit Score

Increasing your credit score is a really effective way to achieve a lower interest rate. You can improve your credit score by:

• Paying down current collection accounts
• Keeping your accounts active
• Reporting any errors to the credit bureaus
• Keeping payments on time

Also working to improve your DTI (debt-to-income ratio) should be another focus as it works in conjunction with the above tips to help with getting a lower interest rate.

Negotiate Your Refinancing Offer

The way you would conduct a negotiation with your current lender should be the same as if you were negotiating with a brand-new one. There are steps you should take, and here are a few of them:

Get quotes from multiple lenders. When shopping for a new mortgage, give yourself leverage when your current lender knows you're shopping around for rates because it shows that you want to get the best deal even if it means refinancing through another lender. This encourages your original lender to compete for your business. You should be comparing your monthly payment, interest rate, closing costs, origination fees and underwriting fees.

Note: If possible, try to keep your rate shopping within a certain time period to minimize the impact on your credit score.

Visit a Loan Officer. It’s possible to meet and negotiate with a loan officer in-person, if you’re comfortable with that. If you do, bring your refinance loan estimates from other lenders with you, and ask if they’d be willing to waive some of the loan closing costs, or if they’re offering any discounts that apply to your situation. This can be effective, since many lenders have loan retention officers to help keep you as a customer.

Refer to your existing loan documents. A great place to get a solid working estimate of what your new loan will cost is to review the terms and fees you paid for the one you already have. Dig in your files and pull out your Loan Estimate and Closing Disclosure forms (loans after 2015) or Good Faith Estimate (GFE) and HUD-1 Settlement Statement (pre-2015 loans). Use the figures there as a basis for comparing any new deal you may be offered.