5 Tips for Finding the Best Refinance Mortgage Lenders

5 tips for finding the best refinance mortgage lenders

To find a refinance lender that meets your needs, use these five tips.

1. Check your credit score for free

For the most part, your credit score determines your interest rate. The higher your credit score, the lower your interest rate. Maybe your score has changed, for better or for worse, since closing your original home loan.

If you are refinancing with a spouse or partner, the lender will likely consider the lowest middle score between the two of you.

Knowing your score can help you see where the next price break might be. For example, look at this FICO mortgage rate chart, broken down by credit score ranges. According to this, if your credit score is in the 680 to 699 range, it might be worth the time and effort to pay off a few credit cards and get your score above 700. The interest rate improvement looks pretty appealing.

Of course, every lender has its own method of pricing loans, so that FICO chart is not the law of the land. But it will help you narrow down the lenders offering you something close to the interest rate you deserve, based on your credit score.

2. Shop around for the best refi

Even if you go back to your current mortgage lender for your refinance, shop at least a couple of other lenders to see how interest rates and terms compare.

You might believe that going to your existing lender will save you time and hassle. “They know us, they’ve already got all of our paperwork,” you may think. If only that were true. It’s a new loan for them, just like it’s a new loan for any lender. The paperwork will be the same.

When lenders know you’re shopping around, they are more likely to compete.

» MORE: 5 tips for finding the best mortgage lenders

3. Negotiate for the lowest lender fees

Yes, you can negotiate. Just as you did when you bought your house, everything can be negotiated. Third-party fees, like appraisals and attorney’s fees, are harder to bargain for — but not impossible. Lender fees are fair game.

Ask each lender, “What are all of the ‘origination charges’ that I will find listed on the Loan Estimate, under Loan Costs, Item A if we proceed?" Use those exact words and get the answer in writing. Now you can compare lenders' fees.

» MORE: What is a mortgage origination fee?

4. Know the difference between your payment rate and APR

You’ve been through the mortgage process before, so you’ve got an idea how all of this works. Still, some mortgage lenders can toss out a bunch of terms and conditions that can muddle the process. Interest rates are sometimes the most confusing.

As you compare lender offers, look for your payment rate — the rate your monthly payment is based on — and the annual percentage rate. Naturally, you’ll be very interested in the payment rate; that’s what every lender is hawking. But the APR wraps your payment rate together with all the fees you’re charged. This is an important consideration when choosing who gets your business.

Try out the NerdWallet Mortgage APR Calculator to see the relationship between interest rates and APR.

5. Consider how well lenders match your situation

You might like the “we’re your neighbors” vibe of a credit union or the ’round-the-clock convenience of an online lender. Lenders have specific personalities and capabilities. Some are well-versed in government loan refinancing; others are noted for outstanding customer service. You’re the customer, you decide what you need and what's most important.

We’ve assembled some of the leading refi lenders for different situations below. And for more options, see our complete list of the best refinance lenders.

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