Financial institutions may have tightened their lending restrictions, but interest rates are still at historic lows. And this environment may be a boon to certain borrowers, as long as they meet certain requirements. If you're a homeowner with a mortgage—and a relatively high-interest rate—it may be a good time to consider refinancing your loan. If you're having trouble, we've done some research for you. Keep reading to find out more about your refinance options and about the top lenders in the United States, according to a 2020 U.S. News report.

Key Takeaways

  • Refinancing a mortgage means taking out a new loan to pay off your existing mortgage at a lower interest rate.
  • U.S. News ranks the top lenders for different circumstances, including different credit ratings, product selection, no down payments, and low costs.
  • Minimum FICO scores for U.S. News' best lenders range from 500 to 620.
  • It may not make sense to refinance if you're close to paying off your loan or if you plan to sell your home in the near future.

Why Refinance?

When you refinance a mortgage, you take out a new loan to pay off your existing mortgage at a lower interest rate—a move that can save you thousands of dollars over the life of the loan. As mentioned above, mortgage rates are still low by historical standards (see the chart), which means it might be a good time to consider refinancing, especially if you took out your existing mortgage when interest rates were much higher.

Refinancing may also be worth a second look if you have an adjustable-rate mortgage (ARM), where the interest rate moves up and down in response to economic conditions. While these loans can be attractive at first, they often lead to higher rates down the road, not to mention increased stress if you’re worried about rates increasing in the future.

Flagstar Bank

Flagstar Bank provides services to clients access the country. Applications can be done online and down payments may be required based on the type of mortgage product.

Highlights

  • Ranked by U.S. News as the best lender for fair credit
  • Offers adjustable (5/1, 7/1, and 10/1), conventional, jumbo, FHA, VA, USDA, refinancing, construction, FHA (203)k, State Housing Finance Agency, home equity loans, and lines of credit
  • Minimum FICO credit score: 600
  • Origination fee: varies based on the type of loan

Carrington Mortgage Services

This mortgage lender offers services to borrowers across the United States, with locations in Arizona, California, Connecticut, Florida, Indiana, and Maryland. The company has advanced about $22 billion worth of home financing to customers since 2011.

Highlights

  • Ranked by U.S. News as the best lender for bad credit
  • Offers ARMs, conventional loans, FHA, jumbo loans, USDA, VA, and refinancing loans, and home equity lines of credit
  • Minimum FICO credit score: 500
  • Origination fee:: not disclosed 

Guild Mortgage

This lender specializes in financing for residential loans. The company, which was established in San Diego in 1960, services customers across the country.

Highlights

  • Ranked by U.S. News as the best lender for product selection
  • Offers conventional, adjustable, VA, USDA, FHA, interest-only, jumbo, refinancing, and home equity loans
  • Minimum FICO credit score: 600
  • Origination fee: not disclosed

Lenders may require a certain amount of equity in your home before you can refinance, so be sure you know how much you've built up.

New American Funding

New American Funding is a mortgage lender with more than $27 billion in home loans across the country except for New York and Hawaii. Borrowers can qualify with a debt-to-income (DTI) ratio of 28%.

Highlights

  • Ranked by U.S. News as the best lender for low annual percentage rate (APR)
  • Offers conventional, adjustable (5/1, 7/1, and 10/1), VA, USDA, FHA, interest-only fixed-rate, jumbo, refinancing, and home equity loans as well as reverse mortgages
  • Minimum FICO credit score: 500
  • Origination fee: not disclosed

Alliant Credit Union

This credit union has a presence in virtually every state except for Maryland. It offers most mortgage products except FHA, USDA, and VA loans. The nonprofit financial credit union allows borrowers a debt-to-income ratio of up to 50%.

Highlights

  • Ranked by U.S. News as the best lender for no down payment
  • Offers traditional, no down payment loans, refinancing, adjustable (1/1, 3/1, 5/1, 7/1, and 10/), jumbo, and home equity loans
  • Minimum FICO credit score: 620
  • Origination fee: between $995 and $1,795, depending on the loan

Chase

Chase is one of the country's largest banks. Although branches aren't available in every state, it does offer different types of mortgages and refinance options, as well as home equity lines of credit for borrowers who qualify. Down payments may be as low as 3%.

Highlights

  • Ranked by U.S. News as the best lender for low costs
  • Offers conventional, FHA, VA, adjustable, and refinance loans
  • Minimum FICO credit score: 620
  • Origination fee: varies based on the type of loan

NBKC Bank

NBKC Bank is based in Kansas. It promises a simple application process for customers in all 50 states. Although the lender doesn't charge fees for VA loans, it isn't transparent when it comes to fees for other loans.

Highlights

  • Ranked by U.S. News as the best lender for no down payment
  • Offers fixed-rate (10- 15-, 20-, 25-, and 30-year), FHA, VA, 5/1 adjustable, and refinance loans
  • Minimum FICO credit score: 620
  • Origination fee: varies based on the loan; the fee is waived for VA loans

PNC Bank

PNC Bank is a full-service mortgage lender. With over eight million customers across the United States, PNC is one of the largest banks in the country.

Highlights

  • Ranked by U.S. News as the best lender for no low down payment
  • Offers traditional, refinancing, no down payment, adjustable (1/1, 3/1, 5/1, 7/1, and 10/1), VA, USDA, FHA, jumbo, and home equity loans
  • Minimum FICO credit score: not disclosed
  • Origination fee: not disclosed

Bank of America

Bank of America has a presence in all 50 states, serving about 66 million clients. The bank also serves customers in the District of Columbia, Puerto Rico, the U.S. Virgin Islands, and more than 35 other countries.

Highlights

  • Ranked by U.S. News as the best lender for large loan amounts
  • Offers conventional, FHA, VA, jumbo, adjustable (5/1, 7/1, and 10/1), refinancing, and no down payment loans, as well as home equity lines of credit
  • Minimum FICO credit score: 600
  • Origination fee: not disclosed, but qualifying Preferred Rewards borrowers can reduce their fees by $200 to $600

When Refinancing May Not Make Sense

Keep in mind, a mortgage refinance might not make great financial sense for your situation. Here are four circumstances under which it could be smart to avoid refinancing:

  • You’ve had your current mortgage long enough that you’ve paid off most of the interest already and you’re building equity.
  • Your existing mortgage has a hefty prepayment penalty. If there is one, be sure to factor it into your calculations when deciding if a refinance makes sense.
  • You plan to sell your house within the next several years.
  • The fees outweigh what you’ll save. If you’re not sure, do a break-even calculation to see how long you need to stay in the home to benefit from a refinance.

To calculate the feeds, add up all the fees, figure out how much you’ll save every month with the lower payment, and then divide the total fees by the savings. The result is the number of months that will elapse before you break even and start saving money. If, for example, you have $4,000 in loan fees and you’ll save $100 a month on your payment, you’ll break even in 40 months ($4,000 ÷ $100 = 40)—or just over three years.

The Bottom Line

If you're thinking about refinancing your mortgage, it pays to do your own research and compare the various companies’ rates and programs. Also, it’s important to consider your own preferences and needs like how you’d like to apply for the loan. If you’re tech-savvy, you may enjoy (and even rejoice at) dealing with one of the companies that offer a completely digital experience. But if you prefer speaking with someone face-to-face, you may want to find a company that offers in-person assistance at a branch location.