5 best banks to refinance a mortgage

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In a Nutshell

Refinancing your mortgage may help you get a lower interest rate, shorter loan term, reduced monthly payment or cash you can use to pay for financial goals. But you'll need to apply for a new mortgage loan to find out whether you qualify and how refinancing may affect your rate, term and payment. We've rounded up our picks of the best banks to refinance a mortgage with based on factors such as fees, discounts, closing timeline and rate transparency.
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When you refinance, you replace your existing mortgage with a new one that may have a different rate, term and monthly payment.

Refinancing may be worth considering if you can qualify for a lower rate, want to shorten your loan term or have enough equity to get cash out. But you’ll need to pay closing costs again, and there’s no guarantee you’ll get a lower rate. It’s important to understand how a new mortgage may differ from your current loan before you go through the refinancing process. 

We’ve rounded up our picks of the best banks to refinance a mortgage to help you determine which may be right for you.

Best for no lender fees: Ally Bank

Why Ally Bank stands out: When you refinance your mortgage with Ally Bank, you won’t pay application, origination, processing or underwriting fees. You can get a custom quote, lock your rate and complete your application online, but you must finalize the loan in person.

Ally Bank mortgages at a glance

Credit requirementsConventional: 620; FHA: 500 or 580 depending on down payment percent; HomeReady: 620
Notable featureFixed rates and adjustable rates available.

Read more about Ally Bank mortgage loans.

Best for rate transparency: Chase

Why Chase stands out: Chase publishes its lowest starting mortgage rates online. When you enter your home’s estimated value, where you live and your current loan balance, you can get potential rate quotes for multiple loan types and loan terms.

The bank’s refinancing cost calculator can help you estimate the amount you may pay if you decide to refinance. Its refinance savings calculator lets you see how much you might save each month, what your new payment schedule could be and when you’d hit your break-even point.

Chase mortgages at a glance

Credit requirementsNot disclosed
Notable featureRefinancing calculators to help you gauge potential refinancing costs and potential refinance savings.

Read more about Chase mortgage loans.

Best for relationship discounts: Citibank

Why Citibank stands out: Existing Citibank customers may qualify for lower rates or closing cost credits if they meet qualifications. The bank’s refinance calculator lets you compare your current mortgage payments and potential new mortgage payments to determine whether refinancing would save you money over the life of the new loan. The company’s refinancing guide can help you decide whether refinancing is the right choice for you.

Citibank mortgages at a glance

Credit requirementsNot disclosed
Notable featureRefinancing guide can help you decide whether refinancing is the right choice for you.

Read more about Citibank mortgage loans.

Best for applicants with high debt-to-income ratios: Fifth Third Bank

Why Fifth Third Bank stands out: Fifth Third Bank’s Refi Possible® loan is designed for applicants with higher than average debt-to-income (DTI) ratios who may not qualify for refinancing with other products. However, you must speak with a representative to start the application process. You can’t apply or prequalify online.

Fifth Third Bank at a glance

Availability45 states
Credit requirements Conventional: 620; FHA: 600; jumbo: 680
Notable featureFor a limited time, “rate drop protector” program will waive lender closings costs on next refinance if rates drop in the next six to 24 months on qualifying loans.

Read more about Fifth Third Bank mortgage loans.

Best for loan options: PNC Bank

Why PNC Bank stands out: PNC offers refinancing for conventional, FHA, VA and jumbo loans. You can see potential rates based on your location and credit scores.

PNC Bank mortgages at a glance

Credit requirementsNot disclosed
Notable featureRefinance calculator lets you estimate your new monthly payment, potential savings and closing costs.

Read more about PNC Bank mortgage loans.

How to apply for a mortgage refinance

When you’re shopping for a home loan, it’s a good idea to compare quotes from multiple lenders to help get the lowest rates and best terms that you may qualify for.

Mortgage refinancing requirements

The process for refinancing is similar to applying for your original mortgage.

  • Check your credit. Your credit scores are one of the most important factors lenders review to determine whether you qualify for a loan and what rate you may receive. Check your credit reports and resolve any errors before applying to refinance your loan.

  • Pay down debt. Having too much debt is a signal to lenders that you may not be able to afford your monthly payments. You typically need a debt-to-income ratio (DTI) of 43% or less to refinance your mortgage. If yours is higher, make paying down debt a priority before applying to refinance.

  • Gather the necessary documents. You’ll need to provide many of the same mortgage documents when you refinance as you did when you got your original loan. This includes tax returns, proof of income, bank and investment statements, and a copy of your photo ID.

  • Schedule your appraisal. Lenders may require an appraisal to get an accurate assessment of the value of your home before making a lending decision.

Pros of refinancing

Refinancing your mortgage may be worth it if you can take advantage of some of the potential benefits, including:

  • Lowering your interest rate. If your credit has improved or interest rates have dropped since you applied for your current mortgage, you may qualify for a lower rate. Reducing your mortgage rate could save you thousands of dollars over the life of the loan.

  • Lowering your monthly payment. You may be able to lower your monthly payment by extending the term of your loan or refinancing at a lower rate. But keep in mind that if you extend your loan term, you’ll typically pay more in interest over the life of the loan.

  • Eliminating private mortgage insurance, or PMI. If you put less than 20% down when you got your original mortgage, you may have had to get PMI. If the value of your house has increased since you took out your current loan and you have at least 20% equity in your home, you may be able to eliminate PMI by refinancing.

  • Shortening the loan term. Refinancing into a loan with a shorter term will help you pay off your mortgage faster and may reduce the amount of interest you pay over the life of the loan.
  • Having predictable monthly payments. If you have a variable rate mortgage, refinancing into a fixed rate loan means you’ll know how much you owe every month throughout the life of the loan.

  • Getting extra cash. If you’ve built up enough equity, you may qualify for a cash-out refinance that lets you tap the equity in your home to get cash for home improvements or other expenses.

Cons of refinancing

While there are potential benefits to refinancing, it’s important to consider the possible downsides as well.

  1. You may have higher monthly payments. If you refinance into a shorter-term loan, your monthly payments may increase. Higher payments may be worth it to pay off your loan faster, but it’s important to make sure you can afford them before refinancing.

  2. You may get a higher interest rate. There’s no guarantee you’ll qualify for a lower rate when you refinance. If your rate will be higher, refinancing may not make sense.
  • You have to pay closing costs. When you refinance, you must pay closing costs again, which are typically 3% to 6% of your loan balance. Before refinancing, calculate your break-even point to decide if it’s worth it.
  • You may pay more interest. Extending the term of your loan can help lower your monthly payments, but you’ll often pay more in interest over the life of the loan.

Is it better to go to a bank or mortgage company to refinance?

The lender that’s best for you depends on your unique financial situation and the type of loan you want to refinance. Loan offerings, rates, terms and credit requirements vary by lender. Banks may have stricter credit requirements than other financial institutions. However, the only way to know if you qualify is to apply.

It’s a good idea to get quotes from multiple lenders and compare rates and terms to help you decide which option is best for you.

Our methodology: How we picked these home loans

We reviewed more than a dozen lenders to come up with our top picks for the best banks to refinance a mortgage. We considered factors such as fees, loan options, rate transparency, discounts and the availability of tools and resources to help applicants decide if refinancing is right for them.

About the author: Jennifer Brozic is a freelance financial services writer with a bachelor’s degree in journalism from the University of Maryland and a master’s degree in communication management from Towson University. She’s committed… Read more.