Virginia Mortgage Refinance

Virginia Mortgage Refinance Basics

2020-12-31T21:44:00.000-08:00

Have no fear ...

... if you own a home in Virginia, mortgage refinance options abound depending on your situation and particular needs.

Refinancing sounds like a scary thing, but basically you are getting a new loan with better terms to meet your needs. The needs of home owners vary, so it is tough to generalize on that point.

By definition, refinancing is when you apply for a secured loan so that you can pay off another loan secured against the same assets - your home in this case. If the original loan has a fixed interest rate mortgage which has now declined, then you may be interested in pursuing a new loan at a better interest rate.

Each state has unique real estate laws, so be sure to speak with a licensed Virginia State Mortgage Professional regarding your options for a Virginia Mortgage Refinance.

Good news is that interest rate are at historical lows, so if you can find the right deal, you may have a great opportunity to improve your situation.

When is a Virginia Mortgage Refinance an Option?

2020-12-30T22:19:00.000-08:00

As we discussed in Virginia mortgage refinance basics, home refinancing is generally done when you have a mortgage on your home and apply for a second loan to pay off the first one. It is critical to determine whether the savings on interest balances the fees the bank will charge you during the refinance.

Understand your options: in some cases, it's better not to refinance!

The decision to refinance your home depends on several factors, such as: how long you plan to own the house, how much lower the new loan interest rate is, the closing costs for the new loan, how much equity you have in the home, and whether you plan to pursue a cash-out refinance option.

With a typical Virginia mortgage refinance your goal is to lower your monthly payments by taking advantage of lower interest rates. Remember also, that if you have at least 20% equity in your home you may be able to avoid paying Private Mortgage Insurance (PMI).

To take advantage of a lower interest rate you will close on a new loan and pay the closing costs on that loan. This is the case even when you choose a no-cash or low-cash closing option. With a no-cash or low-cash closing, the costs still are there, they just are paid for either with a higher interest rate or are included in the principal balance of the loan. (There's truly no such thing as a free lunch.)

If you plan to stay in the house for only a shirt while, then the lower payments you get with refinancing may not cover the closing costs, thus making the refinance actually cost you more in the long run.

Avoid PMI Payments with a Virginia Mortgage Refinance

2020-12-24T22:26:00.000-08:00

The details of closing on a mortgage can be overwhelming and PMI is one of those mysterious fees that most new home buyers never really understand.

... trust me, you're not alone!

Good news - you may be in position to save some bucks if you understand the rules of PMI when you pursue a Virginia mortgage refinance.

Private Mortgage Insurance (PMI) is added to your mortgage loan when you buy a house with a down payment less than 20% of the purchase price and it can significantly add to your monthly payments depending on your loan value. The best way to avoid PMI is to make a down payment of 20% when you buy your house, but many buyers cannot afford to tie up that much cash when they first buy a house.

If you were unable to pay down 20% when you bought your house, you were most likely required to purchase PMI. If your home has appreciated in the meantime, and you have regularly paid your mortgage down, your home's equity may now be more than 20%. If this is the case and you refinance, you will no longer need to pay PMI, thus lowering your monthly payments.

Knowledge is king and understanding PMI is no exception!

As always, if you're considering refinancing your mortgage in Virginia, please consult with a certified mortgage professional.