Refinancing your Virginia mortgage could save you thousands of dollars—or cost you money if done at the wrong time. With rates hovering around 6-7% in late 2025, many homeowners are evaluating whether refinancing makes sense. This comprehensive guide explains when to refinance, how much you can save, and the complete process for Virginia homeowners.
Refinance rates in Virginia closely track national averages, with the state typically experiencing rates slightly below the national average due to competitive lending markets. However, refinance rates are typically 0.25% - 0.50% higher than purchase rates.
| Loan Type | Purchase Rate | Refinance Rate |
|---|---|---|
| 30-Year Fixed | 6.25% - 6.39% | 6.68% - 7.62% |
| 15-Year Fixed | 5.57% - 5.75% | 5.85% - 6.25% |
| 5/1 ARM | 6.50% - 7.05% | 6.75% - 7.25% |
| FHA 30-Year | 6.04% - 6.23% | 6.66% - 7.00% |
| VA 30-Year | 6.00% - 6.50% | 7.62% - 7.70% |
After peaking around 8% in late 2023, mortgage rates have stabilized in the 6-7% range through 2025. The Federal Reserve's pause on rate adjustments has created a relatively stable rate environment, though economic uncertainty continues to cause minor fluctuations.
Refinancing isn't always the right move. Here are the key situations where it typically makes financial sense.
Most experts recommend refinancing when you can reduce your rate by at least 0.75% to 1.0%. This typically provides enough monthly savings to break even on closing costs within 2-4 years.
If you have an FHA loan or conventional loan with PMI, refinancing to eliminate insurance can save $100-$300+ monthly—even without a rate reduction.
Refinancing from a 30-year to 15-year mortgage builds equity faster and saves massive amounts in interest—if you can afford the higher payment.
Taking equity out of your home through a cash-out refinance can fund renovations, debt consolidation, or other needs—at lower rates than personal loans or credit cards.
If you have an adjustable-rate mortgage (ARM) nearing its adjustment period, refinancing to a fixed rate provides payment stability before rates potentially rise.
Divorce or death may require removing a co-borrower from the mortgage. You must refinance to remove someone from the financial obligation of the loan.
Changes your rate, term, or both without taking cash out. The new loan amount equals remaining balance plus closing costs (if financed).
Best for: Lowering payments, building equity faster, removing PMI.
New loan is larger than current balance; you pocket the difference. Rates are 0.25-0.50% higher. Max 80% LTV usually (100% for VA).
Best for: Renovations, debt consolidation, major expenses.
Fast, low-doc options for existing FHA/VA loans. No appraisal or income check usually required. Must show "net tangible benefit".
Best for: FHA/VA borrowers wanting lower rates with minimal hassle.
Lender pays your closing costs in exchange for a higher interest rate (typically +0.25-0.50%). No cash needed upfront.
Best for: Borrowers with limited savings or planning to move in 3-5 years.
Your break-even point is the number of months it takes for your monthly savings to equal your closing costs. After break-even, you're saving money every month.
Closing Costs
$9,000
Monthly Savings
$250
Time to Profit
36 Months
Rule of Thumb: If you plan to move in 2 years (24 months), you would lose money. If you stay 5 years, you save significantly.
| Scenario | Monthly Savings | Costs | Break-Even |
|---|---|---|---|
| High to Moderate Rate (7.5% to 6.5%) | $228 | $10,500 | 3.8 Years |
| Eliminating FHA MIP | $150 | $8,400 | 4.7 Years |
| Marginal Drop (6.75% to 6.25%) | $133 | $12,000 | 7.5 Years |
Pull reports and scores. Pay down balances to boost score.
Target scores: Conv 740+, FHA 640+ for best pricing. Fix any errors now.
Prepare pay stubs, W-2s, bank statements, and insurance policy.
Having these ready speeds up the process. Lenders will ask for 2 years of history.
Get Loan Estimates from 3-5 lenders to compare rates and fees.
Compare APR and closing costs, not just the interest rate. Check local banks and online lenders.
Choose a lender and lock your rate to protect against increases.
Typical locks are 30-60 days. Ask about float-down options.
Lender orders appraisal ($400-$700) to verify home value.
Streamline refinances may skip this step. Ensure home is tidy and list improvements.
Lender verifies income, assets, and title. Respond to conditions fast.
Avoid new debt or job changes during this time. Underwriters check everything.
Final approval received. Review Closing Disclosure.
Check the CD against your Loan Estimate. Verify cash to close amount.
Sign documents. Old loan pays off. 3-day rescission period begins.
You skip one month of mortgage payments during the transition. Funding happens after 3 days.
Closing costs on a refinance in Virginia typically range from 2% to 6% of the loan amount. On a $300,000 loan, expect $6,000 - $11,000.
Refinancing requirements are similar to purchasing, but can be stricter on seasoning.
Recent lates or collections can disqualify you immediately.
Debt-to-Income (DTI)
Typically max 43%, sometimes up to 50%. Calculated as total monthly debt payments divided by gross monthly income.
Seasoning (Waiting Period)
Conventional loans typically require 6 months ownership. FHA/VA require 210 days (approx 7 months) since first payment.
Virginia Housing (formerly VHDA) offers options for existing borrowers or income-qualified residents.
Fastest option for existing FHA borrowers.
The "VA Streamline" for Virginia's 750,000+ veterans.
Problem: If you refinanced 2 years ago, you likely haven't broken even yet on those costs.
Solution: Wait until you are past the break-even point.
Problem: Turning 20 years left into a new 30-year loan costs massive interest long-term.
Solution: Refinance to a 20 or 15-year term to match your timeline.
Problem: A lower rate with huge fees might not be a deal.
Solution: Calculate break-even on TOTAL costs.
Problem: Using equity for depreciating assets (cars, vacations) puts your home at risk.
Solution: Use cash-out for home improvements or high-interest debt only.
Problem: You won't stay long enough to recoup the closing costs.
Solution: Don't refinance if moving in < 3-4 years.
Problem: First lender rarely has the best deal.
Solution: Get 3-5 quotes. It can save $10,000+.
Problem: Surprise drops in score lead to higher rates or denial.
Solution: Check credit 2 months early and fix errors.
Problem: Some loans charge you to pay them off early.
Solution: Check your current loan documents first.
Problem: Errors happen. Fees change.
Solution: Review the CD 3 days before closing very carefully.
Problem: You pay way more interest over the life of the loan.
Solution: If income allows, take the 15-year for massive savings.
Typically 2-6% of the loan amount. For a $300k loan, expect $6,000-$11,000 in closing costs.
Most programs require 6 months seasoning. FHA requires 210 days. Practically, wait until you have equity and rates drop.
Usually yes ($400-$700). Exceptions: FHA Streamline, VA IRRRL, or sometimes conventional loans with very high equity.
FHA refinances allow scores down to 580. Conventional needs 620+. Lower scores mean higher rates.
Maybe. If you have a large loan ($500k+) and plan to stay 10+ years, the savings can justify the costs. Calculate your break-even.
Yes. This increases your loan balance and monthly payment slightly, but requires no cash out of pocket.
Yes. Virginia Housing offers refinance options for income-qualified borrowers. Veterans can use the VA IRRRL.
Generally no. They must be amortized over the life of the loan. Mortgage interest remains deductible within limits.
Refinancing your Virginia mortgage could save you thousands of dollars—but only if done at the right time. By understanding your break-even point and choosing the right strategy, you can maximize your savings.
No impact on credit score to check
Last updated: November 25, 2025
Disclaimer: Virginia Lending Hub is a lead generation service connecting homeowners with licensed mortgage professionals. We are not a lender and do not make credit decisions. Mortgage rates and program terms subject to change. All loans subject to underwriter approval. Consult with licensed professionals for personalized advice. This information is for educational purposes only.