While the year 2020 has been touch and go at points, the low interest rates it brought with it are certainly popular. Right now, 30-year mortgage rates are at a record-setting low, and refinancing is a bona fide trend. Most homeowners are itching to take advantage of those rates to save money on their mortgage loans.
According to research by Freddie Mac, borrowers who refinanced their mortgage in the first quarter of 2020 lowered their rate by about 0.75% and saved close to $ 2,000 in annual interest payments by refinancing. There’s still plenty of money to save for homeowners who haven’t taken the refi plunge yet, but you need to know what to look for to make the best decision for your needs.
This list of the best lenders for refinancing is compiled using our SimpleScore methodology and it will help you take advantage of 2020’s ultra-low 30-year mortgage rates.
The best 30-year mortgage refinance companies
30-year mortgage refinance companies at a glance
| Lender | Rates (APR) | Min. Credit Score | SimpleScore |
| Rocket Mortgage by Quicken Loans | 2.971% | 580 | 3.4/5 |
| Amerisave | 2.367% | 620 | 4/5 |
| TD Bank | Not available | 620 | 3.2/5 |
| U.S. Bank | 3.193% | 620 | 4/5 |
| Navy Federal Credit Union | as low as 3.641% | 580 | 3.4/5 |
| New American Funding | Not available | 580 | 4/5 |
*30-year fixed rates accurate as of December, 2020.
Read: Current Mortgage Rates for 2020
Best for customer satisfaction – Rocket Mortgage
Rocket Mortgage launched itself to the top of the customer service charts 10 years ago, and hasn’t crash-landed yet.
If you’re comfortable working with an online lender that doesn’t offer in-person mortgage support, you’ll love the Rocket Mortgage experience.
Rocket Loans has held the top spot in J.D. Power’s Customer Satisfaction Study for a decade, despite not having any physical locations to offer support to customers. The website is intuitive and straightforward, and approval can be almost instant if you qualify. The company is willing to consider borrowers with FICO scores as low as 580, too — which means that even borrowers with some credit blips will qualify.
Best for low APRs – Amerisave
If you’re a cost-conscious borrower, Amerisave’s lack of fees and low 30 year fixed rates will interest you.
Rock bottom rates and no origination fee make this lender a bargain.
Amerisave’s 30-year mortgage rates are some of the lowest in the industry — but to get the lowest advertised rate, you may have to pay some points upfront. Still, Amerisave offers to match a competitor’s rate or give you $ 100 if it can’t. The lender charges no origination fees, which results in significant savings. You’ll need a credit score of at least 620 to work with this lender, though.
Best for medical professionals – TD Bank
If you’re a doctor or dentist, TD Bank will overlook that hefty load of student loan debt to help get your mortgage refinanced.
TD Bank’s Medical Professional mortgage can help doctors and dentists borrow the money for a home, even if they’re still grappling with high student debt.
If you need a lender with locations across the nation, you should know up front that TD Bank only has physical branches on the East Coast. You can still apply for a mortgage online or by phone, though — no matter where you are. While many of this lender’s mortgage offerings are solid, TD Bank’s Medical Professional Mortgage is a standout. This loan is specifically for physicians and dentists who have high earning potential but are often held back by soaring student loan debt. TD Bank requires a minimum credit score of 620 to qualify.
Best for no closing costs – U.S. Bank
If you’re trying to refinance but your checking account is on empty, this no-closing-cost option is for you.
If you can’t deal with up-front closing costs, you should consider U.S. Bank’s Smart Refinance option.
U.S. Bank’s Smart Refinance program is a no-closing-cost refinance option, which means you won’t have to pay your closing costs in one lump sum. It’s a great option if you want to take advantage of low 30-year mortgage rates but you’re short on the cash you’d need for closing. However, since the closing costs are included in the loan balance, your payments will be higher — and so will the total amount of interest you pay over the life of your loan. U.S. Bank requires a FICO score of 620 or better to qualify.
Best VA loans – Navy Federal Credit Union
If you’re a veteran or military member who’s looking to refinance, the loan officers at Navy Federal who specializes in VA loans will understand your unique needs.
This lender has lots of refinance options for veterans, including IRRRL loans and a cash-out refi loans for low-equity homeowners.
Members and veterans of the armed forces are eligible to join Navy Federal Credit Union, as are their family and household members. The only borrowers who can qualify to refi through Navy Federal are current and veteran military members who qualify for VA loans, though. VA loans are a specialty at Navy Federal, and the credit union is familiar with all your options, including streamlined IRRRLs and cash-out options.
Best for poor credit – New American Funding
If your financial situation leaves a few standard boxes unchecked, you might appreciate the manual underwriting process offered by New American Funding.
At New American Funding, the manual underwriting process can help people with a nontraditional income and credit issues get better loan terms.
Unlike many lenders, New American offers manual underwriting — meaning a live human is looking at your financial picture to determine your risk, rather than relying on a computer algorithm to make the decisions. If your credit isn’t the best but you can demonstrate a good income or a financial picture, this lender might take those factors into account.
[ Read: Best Mortgages for Bad Credit of 2020 ]
What is a 30-year mortgage refinance?
Refinancing means taking out a new mortgage with new terms. Your new loan pays off the old one and you’re bound by the terms and rates that come with the new loan. People usually refinance to take advantage of 30-year fixed-rate mortgage rates that are lower than what they got with their original mortgages, which can save homeowners thousands of dollars over the life of a loan.
If you choose a 30-year term for your refinance, you can lock in today’s favorable rates and save some cash. You’ll also be spreading your repayment out over the longest term possible, which means lower monthly payments.
Refinancing requires another full-blown mortgage loan process, though. Expect to jump through all the hoops — and pay all the closing costs — that you did the first time. It’s important to take those costs into account when you calculate your potential savings.
How 30-year mortgage refinances work
Applying for a refinance is almost exactly the same process as applying for a mortgage. When you apply, you’ll need to document your income and assets with paycheck stubs, tax forms and bank statements.
The bank will typically require you to pay for an appraisal, which determines the maximum amount it will lend. You can typically borrow between 80% and 95% of the appraised current value of the house. You can borrow just enough to pay off your existing mortgage, or you can borrow additional funds if you have equity built up in your home, which is called a cash-out refinance.
Extending your mortgage terms
One of the advantages of choosing a 30-year mortgage refinance term is that spreading your payments over 30 years results in much lower monthly payments.
If you originally had a 30-year term and you’ve been paying on it for 10 years, you’ll be pushing your final payment back by 10 years — but you’ll also be spreading a lower loan amount over that term, so your payments will drop dramatically.
If reducing your monthly expenses and improving your cash flow is your goal, extending your new mortgage over 30 years might be a good choice for you.
Lower monthly payments vs. more interest charges
Remember the first couple of years of your mortgage, where a large portion of your payments went to interest? You’ll be starting over again from that point.
Even with a lower interest rate, you’ll be temporarily pausing a lot of your progress with paying down the principal. That’s true no matter what term you choose — but if you choose a 30-year repayment, those smaller payments mean you’ll chip away at the interest more slowly.
That means you’ll be paying significantly more interest over the loan term than you would with a shorter-term, or if you hadn’t opted to refinance.
Pros and cons of a 30-year mortgage refinance
Pros
- Lower interest rates
- Lower payments
- Opportunity to cash-out from equity
Cons
- Closing costs can be high
- More total interest
How to choose the best 30-year mortgage refinance for you
- Think through your priorities and goals so you know exactly what you want. Do you want the lowest monthly payment? Do you want to spend less money over the life of the loan?
- Consider any special circumstances, like military service or a poor credit rating, that could impact your mortgage.
- Finish building your wishlist with any special features you want. A bank with local branches, automatic payments, online processing?
- Meanwhile, get a copy of your credit report and check it for errors. Look into opportunities to quickly raise your credit score before you submit your application.
- When you start shopping for rates, remember that the advertised rate is only offered to the most qualified buyers. Your rate might be different.
- Narrow your choices down to a few lenders and ask for a pre-qualification to find what your loan rates, payments and terms would be.
- Gather the documentation you’ll need for your application: W-2s, tax forms, bank statements, homeowner’s insurance, etc.
- Pay attention to how each lender treats you when you make inquiries. Does the staff respond quickly, call you back, keep their promises and prioritize your needs? You’re entering a 30-year relationship with this lender, so look for one that treats you well.
Mortgage refinance FAQs
The best time to refinance is mortgage rates are low so you can save on interest. There are high costs associated with refinancing, so it’s not something you’ll want to do often. Generally, it’s best to wait to refinance until after you’ve made payments for a few years on your original mortgage. It’s also best to avoid refinancing if you’re thinking of selling the house in the next few years.
As of Aug. 20, the best 30-year fixed-rate mortgage interest rates are averaging about 2.5%. The rates you see advertised by lenders are usually available only to the most highly-qualified borrowers and/or those who are willing to pay some points (interest) upfront.
Your rates will depend on your credit score, how much debt you’re carrying relative to your income and other factors. When you look at interest rates, make sure you’re comparing APRs, which include fees and other expenses.
The term describes how long you’ll be making payments on the loan. If you choose a 30-year term, you’ll have lower payments but you’ll be paying twice as long, which means you’ll probably spend more on interest over the lifetime of the loan. A 15-year term will have higher monthly payments, but since you pay it off twice as quickly, you’ll save money on interest in the long run.
Too long, didn’t read?
The best lender for your 30-year mortgage refinance depends on your circumstances and goals. Every homeowner has a different need or goal for refinancing, so it’s important to spend time finding the right lender that can meet those needs. Take all factors into account when refinancing, and do your homework. It’s the only way to ensure you are making the best move possible.
