MORTGAGE refinance is the obtaining of a new loan to pay back the remaining portion of a mortgage loan you have taken earlier, and then pay back the new loan in monthly installments. It is important to note that mortgage refinance implies that you use the same real estate as security as you had for the original loan. People opt for mortgage refinance when interest rates are lower than those that prevailed when the original loan was taken. Mortgage refinance enables mortgagees to leverage lower interest rates to reduce their monthly repayments, pay back the entire remainder of the original loan faster even if that means higher monthly repayments, or reduce monthly payments by extending the repayment period.
Loan Brokers
The good thing about mortgage refinance is that it enables you to consolidate high-cost debt, save on monthly repayments, or provide you with a one-time lump sum of cash, depending on the option you select. For effective consolidation, however, you need to borrow more than the remainder of your current mortgage. This article covers the mortgage refinance scene in the state of Virginia.
Loan options
Home-owners in Virginia can choose from a variety of options for mortgage refinance, such as fixed-rate mortgages, and adjustable rate mortgages (ARM) in both the 'conforming' and 'jumbo' categories. Fixed-interest loans usually mature in 30 years. However, lenders also offer 15-year repayment plans. Obviously, the 30-year plan entail a higher interest rate than the 15-year. Also available are 40-year loans though they are not very popular. ARMs offer a low rate and low payment in the early months of the loan, and subsequently increase them over time. The ARMs available are: 5/1 ARM, 3/1 ARM, 1 year ARM, interest-only mortgage 3/1 ARM, and interest-only mortgage 5/1 ARM.
Online calculators
You can find online calculators on websites of different mortgage companies, which will help you judge whether you should opt for mortgage refinance in the first place -- and, if you should, which loan type would be most suitable for you. The factors that the online calculator will use to calculate you different options include: your credit profile, remainder of the existing loan, the interest rate you are paying on your existing loan and that which you want to pay for the refinance, the type of property, the number of years you want to retain it, and so on. Remember that the information you get from online calculators are only approximate, and that you must consult a broker or lender for precise details.
Conclusion
Mortgage refinance, whether in Virginia or any other state, should be opted for only if it makes economic sense. And 'economic sense' does not necessarily mean that you should pay less. You may pay more, but for a shorter period of time. Or you may pay less but for a longer period of time. Or simply keep the same duration of repayment but avail of a lower rate, so that you save some money every month. The choice you make will obviously one that you need.
