Refinancing Into a Conventional Loan in Virginia: Is It Worth It?

Conventional Loan

Refinancing Into a Conventional Loan in Virginia: Is It Worth It?

Reviewed by the HomeMath editorial team Updated 2026-08-06

Key takeaways

Closing costs typically run 2%‑5% of the loan amount plus a Virginia attorney fee (often $500‑$1,200).
Refinancing can eliminate private mortgage insurance (PMI) when the new loan is 80% or less of the home’s current value.
A rate reduction of about 0.5%‑0.75% usually justifies the refinance after 2‑3 years of breakeven.
Virginia’s attorney‑driven closings add a flat fee, so compare total cost, not just the interest rate.

Refinancing a conventional loan in Virginia can lower your monthly payment, eliminate private mortgage insurance (PMI), or free up cash for other needs. Whether the move is worth it depends on the interest‑rate savings you can lock in, the equity you have, and the total cost of closing.

How a Conventional Refinance Works

A conventional refinance replaces your existing mortgage with a new one that has different terms. The lender pays off the old loan and issues a new loan under a conventional (non‑government) program, which typically requires a credit score of 620 or higher and a loan‑to‑value (LTV) of 80%‑95%.

Potential Savings

Lower interest rate – reduces the amount of interest you pay over the life of the loan.
Drop PMI – if the new LTV is 80% or less, the lender will usually remove PMI.
Change loan term – extending can lower monthly payments; shortening can save interest.
Cash‑out option – tap home equity for renovations, debt consolidation, or other expenses.

Costs to Expect

Origination and underwriting fees (typically 0.5%‑1% of the loan).
Appraisal fee (around $300‑$500).
Title search and recording fees.
Attorney fees – Virginia closings are commonly handled by attorneys; fees often range $500‑$1,200.
Prepaid interest, escrow deposits, and possible mortgage insurance premiums.

Virginia‑Specific Considerations

Most Virginia closings involve an attorney rather than a title‑company representative, which can add a flat fee but also provides legal oversight of the transaction. The Virginia Housing Development Authority (VHDA) offers a Mortgage Credit Certificate (MCC) program that can provide a tax credit for qualified borrowers; while it primarily applies to purchases, it may still affect the overall cost‑benefit analysis of a refinance.

When It May Be Worth It

The new interest rate is at least 0.5%‑0.75% lower than the existing rate.
You have enough equity to reach 80% LTV and drop PMI.
The breakeven point (total savings vs. total costs) occurs within 2‑3 years.
Your credit score has improved, qualifying you for better terms.

This article provides general information and should not be considered personalized financial advice. Consult a qualified lender or mortgage professional to evaluate your specific situation.

FAQ

What is the difference between a conventional refinance and an FHA refinance?

A conventional refinance is not backed by a government agency and typically requires a higher credit score and lower loan‑to‑value ratio, while an FHA refinance uses the Federal Housing Administration’s insurance program, allowing lower credit scores and higher LTV but often requiring mortgage insurance premiums.

Can I refinance without an appraisal in Virginia?

Some lenders offer a limited‑document or appraisal‑waiver refinance if you have strong credit and a low LTV, but many Virginia lenders still require an appraisal to satisfy underwriting and satisfy state closing practices.

How does the Virginia Mortgage Credit Certificate affect a refinance?

The MCC provides a federal tax credit based on a percentage of the mortgage interest you pay. If you retain the MCC after refinancing and the new loan meets program requirements, the credit can continue to reduce your tax liability, improving the overall financial benefit.

What happens to my existing loan term when I refinance?

You can choose to keep the original term length (resetting the clock) or select a new term—shorter to pay off the loan faster and save interest, or longer to lower monthly payments. The choice affects both your monthly cash flow and total interest paid.

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