How to Choose the Best Mortgage Refinance Lender

Updated on May 2nd, 2023

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If you’re like most homeowners, you likely spend more time and effort deciding on where to go for a $30 meal than for a $300,000 mortgage. For most everything you buy — from smartphones to fajitas — you probably research reviews, compare prices and check the social media buzz, except when it comes to your biggest financial decision: a mortgage.

If you’re looking to refinance your mortgage, it’s probably more important than ever to find the right mortgage refinance lender. You’re looking to lower your interest rate, your monthly payment, and maybe even the number of years it will take to pay off your loan. That’s worth a bit of your time. And odds are, the best refinance lender won’t be your current mortgage holder.

How to Find the Best Refinance Rate

Failing to shop around for rates can bite you big time. More than three-quarters (77%) of borrowers apply to a single lender, according to the Consumer Financial Protection Bureau. And the CFPB’s research found that shopping a 30-year mortgage among multiple lenders can lead to interest rates varying by more than half of a percent, which could save you thousands of dollars on your mortgage payments in just the first five years of a loan.

And that’s why your current mortgage holder is probably not the best bet for your refinance. Chances are, you didn’t shop around much for that first mortgage. You were probably just happy to get approved and close the loan, right? But now you know it’s important to compare lenders and apply to more than one. If your current lender offers the best loan package, you’ll know for sure this time.

To receive an official loan estimate from a lender, you don’t have to hand over a bunch of written documentation. Usually, it’s just a matter of providing a handful of key details: your name and income, Social Security number, property address, an estimate of your home’s value and the amount you wish to refinance. But the more information you provide, the more accurate the estimate you’ll receive.

Most lenders will charge a fee of somewhere around $20 to pull your credit report. Then each lender will provide you with a standard loan estimate that will detail the terms and costs of its mortgage refinance proposal.

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More Online Mortgage Refinance Options Than Ever

And it’s easier than ever to shop mortgage rates. With the rapid growth of alternative mortgage lenders, an online search will get you off to a good start. Not only will you find direct lenders such as Quicken Loans, SoFi and Loan Depot, but also mortgage marketplaces such as Lending Tree and Mortgage Hippo.

From there, you can broaden your search to more traditional — as well as local — mortgage lenders.

Consider a Credit Union for Your Home Refinance

Credit unions — nonprofit, member-owned financial institutions — offer some of the best bargains on the better-than-a-bank block. Credit unions originated a record amount in mortgages in 2015 but still have only a sliver of the total pie — just 8.5% of all mortgage loans in the U.S. But that’s about double the amount they originated in 2010 .

Objective Advice Matters

Mortgage lenders themselves are the most common source of home-loan advice, according to recent research by Fannie Mae. Sure, lenders are helpful but — and we’re risking a huge understatement here — they may not be the most objective source of information regarding the product they’re selling.

So, even though you’ve been through the home loan process at least once, before you jump into a refinance, make sure the time is right, consider all the things you need to do to maximize your refinance savings, and then take the refinance process step by step.

By shopping more than one mortgage lender — say three or more — you’ll be way ahead of most borrowers. You’re much more likely to get a better interest rate and save money both in the short and long term. And by comparing the loan estimates you receive from each potential lender side by side, the best mortgage refinance package will be much easier to choose.

More from NerdWallet:

Compare Mortgage Refinance Rates
What to Expect From the Homebuying Process

If you are represented by an agent, this is not a solicitation of your business. This article is for informational purposes only, and is not a substitute for professional advice from a medical provider, licensed attorney, financial advisor, or tax professional. Consumers should independently verify any agency or service mentioned will meet their needs. Learn more about our Editorial Guidelines here.

Hal Bundrick, CFP

Hal writes about real estate for NerdWallet, a personal finance website. A certified financial planner and former Wall Street investment specialist, Hal brings years of expertise to NerdWallet’s mission of providing clarity for all of life’s financial decisions.

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