Market volatility and economic changes have a direct effect on refinance mortgage rates in Virginia. The Federal Reserve often moves interest rates up in a growing economy and down in a recession. These changes control the annual percentage rate (APR).
Factors Affecting Virginia Refinancing Interest Rates
One’s personal financial situation has a major impact on what APR the lender qualifies to pay. Bad credit forces one into paying a higher rate and larger down payments. Those with the best credit ratings will qualify for the lowest rates. The other major influence on refinancing is the cost of closing. Some loan companies offer a “no cost” option. Usually a borrower pays thousands of dollars to cover escrow, settlement fees, title insurance, and underwriter fees. A no-cost home mortgage helps borrowers with limited finances get into a new loan.
One can save more money, however, by paying the closing costs up front. This saves those costs from being folded into the amount of the mortgage or added in as a higher rate.
30-Year Refinance Rates
One can save most with 30-year refinance mortgage rates. Rates in Virginia may be higher with short-term loans such as 15-year notes. The lender attempts to recoup profit by charging a higher rate for buyers who pay the loan sooner. However, if one pays a 30-year note on the same schedule as a 15-year note, he or she will have the advantage of both options. Other ways of getting a reduction from current mortgage rates, include buying points. A borrower may be able to pay down a half point to two points on a loan. While buying points will cost an additional percentage upfront, this saves thousands over the life of the loan. A half point on a $200,000 mortgage would cost $1,000 and a whole point would cost $2,000. The points paid will reduce the APR by as much, so that a 7% APR would become 6% if the borrower could pay down one point.
Borrowing from Banks or Mortgage Brokers
Local banks do not offer as many refinancing options as mortgage companies and specialized lenders. A small bank may carry a mortgage for a short time before selling it to a mortgage company. One should consider all options available from various finance companies, such as FHA, VA, and no-cost mortgages. With good research, Virginia homeowners can find many options in the current lending market to refinance any home.
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