Are you thinking of refinancing your mortgage? Are you a resident of the state of Virginia? Or thinking of moving there? Then read on. We have some useful advice that all home owners – and potential home owners – will want to hear.

When should a person refinance their mortgage? A question that everyone will need to ask at least once in their lives. There are two main reasons that motivate the refinancing of a mortgage: one is to get a more desirable rate and terms. The other is to extract money from the equity of the house or condo. Both of these things can of course be fulfilled simultaneously when you refinance your home mortgage loan.

Rate and term refinancing

Rate and term refinancing can be used to pay off one loan with the proceeds from a new loan, while using the property in question as collateral. Rate and term refinancing allows one to take advantage of lower interest rates or shorten the term of one’s mortgage in order to build up equity at a quicker pace. This kind of loan can involve many different strategies, including switching from an ARM rate to a fixed rate – or the other way around. Let us say you have an ARM that is going to adjust upward in a few months’ time; you can refinance that ARM in to a fixed rate mortgage. Or, if you happen to have a fixed rate loan and want to move in three years, you might then wish to refinance in to a lower rate 3/1 hybrid ARM.

Cash out refinancing

Cash out refinancing leaves you with cash above the amount needed to pay off your mortgage, closing, points, and liens. You may use the money for anything.

For example, let us say you bought a home for $150,000 a few years ago and borrowed $120,000. The house now has an appraised value of $250,000 and you still owe $110,000. With a cash out refinance, you would be able to get a mortgage of $150,000. You pay off the $110,000 you owe and pocket the $40,000 difference.