Suppose a Hanover County, VA homeowner owes $320,000 on a 7.00% note and is weighing a 6.00% refinance on a new 30-year term. Principal and interest (P&I) on the current loan is about $2,129 a month, and on the new loan it is about $1,919, a drop of roughly $210 before taxes, insurance, and closing costs. If closing costs run an illustrative $6,300, the refinance breaks even in 30 months ($6,300 ÷ $210). Whether that is a good deal depends on how long you will keep the home.
This guide walks you through a Hanover County refinance in seven steps, so you finish with a clear go or no-go decision and a ready file. Before you start, have your latest mortgage statement, two years of income documents, and a rough idea of your home’s value. I’m Duane Buziak, NMLS #1110647, and every figure here is illustrative, not an offer or a quote.
- Step 1: Name your refinance goal
- Step 2: Gather your numbers and documents
- Step 3: Check your equity and credit position
- Step 4: Pick the refinance program that fits
- Step 5: Compare costs from different lender models
- Step 6: Run the break-even and closing cost math
- Step 7: Lock, appraise, and close
- Your next move
- Hanover County refinance questions answered
Step 1: Name your refinance goal
Pick one primary goal. The common ones are a lower monthly cost, a shorter term, removing FHA mortgage insurance, moving out of an adjustable note cost into a fixed one, or taking cash out. The goal decides the loan type, and chasing two goals at once usually muddies the comparison.
Two terms matter right away. A rate-and-term refinance replaces your loan to change the note cost, the term, or both, without pulling out cash. A cash-out refinance replaces your loan with a larger one and pays you the difference. Cash-out typically carries stricter loan-to-value limits and different pricing than rate-and-term.
The mistake to avoid is resetting to a new 30-year term without counting total interest. Using the opening example at an assumed 6.00% for both terms (before taxes, insurance, and closing costs):
| New loan on $320,000 at 6.00% | Monthly P&I | Total interest over the term |
|---|---|---|
| 30-year | about $1,919 | about $370,700 |
| 20-year | about $2,293 | about $230,200 |
The 20-year payment is roughly $164 higher than the current $2,129, but it saves about $140,000 in interest over the life of the loan. If your goal is a lower monthly cost, the 30-year wins. If your goal is paying less interest overall, the shorter term deserves a look. Pricing often differs by term, so treat these as a starting point, and remember that if your current loan has years behind it, you are restarting the clock.
Step 2: Gather your numbers and documents
Start with your latest mortgage statement. Write down four items: the payoff amount (which can differ slightly from the balance), your current note cost, the remaining term, and the escrow breakdown showing what goes to property taxes and homeowners insurance.
Then assemble the document file lenders will ask for:
- Two years of W-2s or tax returns
- Recent pay stubs covering about 30 days
- Two months of bank statements, all pages
- Your homeowners insurance declarations page
- For self-employed borrowers: a year-to-date profit and loss statement on top of the tax returns
Next, estimate your home’s value. Look at recent sales of similar homes in your part of Hanover County, whether that is Mechanicsville, Ashland, Atlee, or Elmont. Match on size, age, and condition, and give the most weight to the closest and most recent sales. Treat the result as a working number only. An appraisal, or an eligible appraisal waiver, sets the real figure, and an appraisal is not something you can count on skipping.
Having this file ready before you talk to anyone saves days later and lets you compare offers on equal footing.
Step 3: Check your equity and credit position
Loan-to-value (LTV) is your loan balance divided by your home’s value. With the $320,000 balance and an estimated $425,000 value, LTV is about 75% ($320,000 ÷ $425,000). On a conventional loan, staying at or below 80% LTV generally means no private mortgage insurance (PMI). If the appraisal came in near $390,000, LTV would be about 82%, and PMI would likely enter the picture and change your math.
Credit matters just as much, and you can check it without a penalty. My NoTouch Credit Pull is a soft pull pre-approval with no credit hit, no cost, no fees, and no commitment, so we can look at your credit position before any hard inquiry happens.
Also confirm the size of your loan against the conforming loan limit, which is the maximum loan amount Fannie Mae and Freddie Mac will buy. The Federal Housing Finance Agency sets it each year, and it varies by area. Check the current figure for the Richmond area on the FHFA website as of 2026 before relying on any number you read elsewhere. A balance above the limit moves you into jumbo territory, which has its own guidelines.
Write down three results from this step: your LTV, whether you are above or below 80%, and whether your balance sits under the conforming limit.
Step 4: Pick the refinance program that fits
Your goal from Step 1 and your current loan type narrow the choices. Program rules change, so confirm details against the agency pages: VA.gov, HUD.gov, and the Fannie Mae Selling Guide.
| Program | Who it suits | Appraisal | Key condition |
|---|---|---|---|
| Conventional rate-and-term | Owners with a conventional or other loan wanting a lower cost, a new term, or FHA mortgage insurance removed | Usually required; waivers possible on eligible loans | LTV and credit; PMI generally applies above 80% LTV |
| Conventional cash-out | Owners with meaningful equity who want funds for a specific purpose | Typically required | Lower maximum LTV than rate-and-term; pricing is usually higher |
| FHA streamline | Current FHA borrowers | Often not required | Must already have an FHA loan; payment history and a net benefit to you apply; no cash out |
| VA IRRRL (interest rate reduction refinance loan) | Current VA loan holders | Often not required | Must already have a VA loan and be refinancing it; a funding fee and seasoning requirements generally apply |
VA families: the IRRRL is built to lower the cost of an existing VA loan with limited paperwork. VA generally charges a reduced funding fee on it and expects a minimum number of payments made before you refinance, so verify both on VA.gov and confirm with me for your situation.
Self-employed borrowers: some programs offer bank-statement or other alternative documentation instead of full tax-return income. Availability varies by program and lender, and these loans are priced differently, so ask early rather than assuming either way.
Step 5: Compare costs from different lender models
Lenders are built in two basic ways. I work as a broker, which means I shop your loan across hundreds of wholesale lenders and you work with one point of contact. Single-company lenders such as Rocket Mortgage, Movement Mortgage, C&F Mortgage, Southern Trust Mortgage, Sparrow Home Loans, and Lower.com each offer their own set of loan products and their own process, and plenty of borrowers value that consistency and a single brand from start to finish.
On Lower.com specifically, PowerTPO is Lower, LLC’s wholesale arm, and I have direct wholesale access to it without a retail markup. That describes how the access works. It is not a claim about pricing. Any lender model can come out ahead on a given day for a given borrower, which is why you compare in writing.
Use the CFPB’s Loan Estimate guide to lay each Loan Estimate side by side, and check these lines:
- Section A, origination charges: the lender’s own fees, including any points.
- Sections B and C, services: the costs of services you cannot shop for (B) and can shop for (C), such as title and appraisal.
- APR: the annual percentage rate, which folds some fees into a yearly cost so offers are easier to compare.
- Cash to close: what you actually bring or receive at signing.
Make sure every estimate uses the same loan amount, term, and lock period, or you are comparing different things. That is the idea behind my Dare to Compare challenge: bring me any written Loan Estimate and I will put mine next to it line by line. I cannot promise a particular result, only a clear comparison.
Step 6: Run the break-even and closing cost math
The break-even point is the number of months it takes for your monthly savings to repay your closing costs. The formula is total closing costs divided by the monthly payment reduction. From the opening example, $6,300 ÷ $210 gives 30 months. If you expect to stay in the home well beyond that, the refinance can pay off. If you might sell or refinance again sooner, it likely will not.
| Illustrative closing costs | Monthly reduction | Break-even |
|---|---|---|
| $4,000 | $210 | about 19 months |
| $5,000 | $210 | about 24 months |
| $6,300 | $210 | 30 months |
| $8,000 | $210 | about 38 months |
| $6,300 | $150 | 42 months |
If you prefer not to pay at closing, ask about no-out-of-pocket closing options. The costs are either rolled into the loan or covered through pricing. The tradeoff is a higher balance or a higher note cost, which shrinks your monthly savings and pushes out break-even. Run the math both ways before choosing.
Property taxes do not change because you refinance. They change when the county reassesses your home. Check the current real estate tax rate on the Hanover County government website and confirm the figure there. As an illustration only, if a rate were $0.80 per $100 of assessed value, a $425,000 assessment would produce about $3,400 a year in tax. Whatever the rate is, your escrow for it should carry over to the new loan.
Step 7: Lock, appraise, and close
The typical sequence runs like this: application, initial disclosures, appraisal or waiver, underwriting conditions (requests for more documents), the Closing Disclosure, and signing. Timelines vary with the lender, the appraisal schedule, and how quickly documents come back, so treat any estimate you hear as typical, not guaranteed. The Closing Disclosure must reach you at least three business days before closing, per the CFPB. Use that window to compare it to your Loan Estimate and ask about any change.
The rate lock decision is a tradeoff. A rate lock holds your note cost and terms for a set period, typically 30 to 60 days, and a longer lock can cost more. Floating means leaving the cost unlocked, which could help or hurt you if the market moves. If you cannot tolerate a higher payment, lock. If costs move in your favor after you lock, ask whether your lender offers a float-down or re-lock option, because policies differ. If the closing date slips past your lock, get an extension priced in writing before it expires.
On a refinance of your primary residence, federal rules generally give you three business days after signing to cancel. This is the right of rescission, and the CFPB explains it on consumerfinance.gov. Funds are not disbursed until that period ends, so plan your payoff timing and any cash-out use around it. Your first payment on the new loan is typically not due right after closing, but the exact date is on your closing paperwork.
Your next move: a soft pull check before any hard inquiry
If your break-even lands comfortably inside the time you plan to stay in your home, you have a go. If it doesn’t, you have a clear no-go and a file you can reuse when conditions change. Either way, you have the numbers.
Ready to see what you qualify for in Hanover County? Duane Buziak, VA Broker of the Year 2024 and 2025 and Scotsman Guide Top Originator, runs a soft credit check first so there’s no hard inquiry on your credit report. Call 804-212-8663 or apply online with Hanover Mortgage by Duane Buziak. Duane Buziak NMLS #1110647 | Equal Housing Opportunity.
