Perhaps you've built up equity in your home that you'd like to "cash out" and use for another purpose such as paying off higher interest debt or helping a child go to college. These are some of the most common reasons homeowners have for refinancing their home loan.
How does refinancing a home work?
When you refinance your house, you are essentially applying for a new mortgage to replace your current one. However, you don't have to use the same lender. For example, if you have an existing mortgage with another bank, you can refinance with The Fauquier Bank. You can also refinance government-insured mortgages such as FHA Loans, VA Loans, and USDA Loans.
Some steps in the refinancing process will be familiar to you from your original mortgage application. For example, your mortgage refinance lender will need to appraise your home to determine its current value. Your credit will also be checked, and you'll need to provide proof of income as well as other supporting documents about your financial situation.
How soon can you refinance?
There are no firm rules, but a good guideline is to wait at least a year so you can demonstrate a history of on-time payments. You will also want to know if your current mortgage has a prepayment penalty. Generally, mortgage payments are structured so that you pay more interest than principal on the loan for the first several years. Unless your home has rapidly increased in value, or rates have gone down significantly, refinancing may not make sense until you're at least five years into your loan. Reach out to our mortgage lending team for personalized advice about your refinance situation.
How much does it cost to refinance a mortgage?
There are closing costs associated with a refinance, just like a first mortgage. To estimate how much it would cost you to refinance, you can use the Home Refinance Calculator from myFICO. For example, let's say you're refinancing for the current median home value in Prince William County, which is $374,100. You can expect to pay about $9,000 in closing costs. That's in line with the national estimate that closing costs are usually 2-5 percent of the loan amount.
How long does it take to refinance a house?
You can expect the process to take about 30 days, similar to the timeline for closing on your original mortgage. TFB strives to make your mortgage refinancing process as easy and efficient as possible. You can count on us to get it done as quickly as possible; however, there are still steps such as appraisal and underwriting that take time.
Contact a TFB Mortgage Lender Today!
Ready to learn more about refinance mortgages and review your home loans options? Contact our local mortgage lenders; visit your nearest TFB branch in Manassas, Haymarket, Bristow, Gainesville, Warrenton, The Plains, New Baltimore, Catlett, and Bealeton; or apply online. TFB's friendly team is ready to put our local expertise in the Northern Virginia real estate market to work for you. All of our decisions are made right here in Prince William and Fauquier counties, which gives us more flexibility and responsiveness to our customers' needs. If you have a question, just give us a call or stop by. You'll love the personalized service you receive from the mortgage lending team at TFB.