Looking for the best Washington DC refinance rates? Use the free tool at the top of the page to find and compare top DC home loan rates to get the very best rates on a DC mortgage refinance. Washington DC residents have a number of different options and as such it is crucial to do your homework before you decide to sign on the dotted line. Read on the get the skinny on how to find the best DC refinancing package.
Washington DC Home Ownership
The District of Columbia is the official name for Washington, D.C. Chosen as the Capital of the United States by President George Washington, District of Columbia is the only state that does not allow its residents full voting rights in the national legislature, or the House of Representatives and the Senate.
D.C. is currently populated by over 590,000 residents who have several home ownership options available to them. The city encourages home ownership through various programs designed to stimulate the economy for the development of housing and communities.
DC home owners who have not yet paid off their mortgage have several options, including refinancing, to possibly lower their currently monthly mortgage payments.
Government Programs That Do Not Impact DC Refinance
Several government programs have been put in place by the District of Columbia to stimulate economic development. One program provides a low cost financing gap to multi-family homes. The homes need to contain five or more units and be geared for low income individuals or families. There is also New Construction Assistance, funding for Site Acquisition, a Tenant Purchase Technical Assistance Program, and a Low Income Housing Tax Credit Program.
Various Home Ownership Opportunities programs were also designed to provide residents with a chance to own their own home or help fund necessary repairs:
The Home Purchase Assistance Program provides low interest or no interest home loans to qualified residents.
The Employer Assisted Housing Program matches down payments and defers loans for government employees who are first time home buyers.
The Single Family Residential Rehabilitation Program offers financial assistance to those who need to bring their homes up to code and the Handicapped Accessibility Improvement Program (HAIP) rewards grants to make a home handicap accessible.
The Lead Safe Washington Program is also a grant program and it provides funds to low income families with children under the age of six who need to update their home and make it lead free.
When Your Mortgage Requires a DC Refinance
After you purchase your first home, you may determine that you need to refinance your mortgage. This may be to tap into equity, modify the contract length, or simply and most commonly, to lower your interest rate. In order to refinance successfully, you should try to prepare ahead of time.
Your credit score is a major determining factor in the interest rate you will be offered. A score of 740 or better is ideal for the best rate available. Paying points up front can lower your rate, but this only has a return on your investment if you plan on being a long term resident. Points are not viable for a short sell.
With today’s economy, appraisals are coming in very conservatively, so ideally you will have equity that is at least 20% of the appraisal value. Your housing expense should also be conservative at less than 35% of your income. If you are able to refinance, consider a shorter term mortgage if possible. A fifteen year mortgage will result in a higher monthly payment than a thirty year mortgage, but you will receive a lower interest rate and ultimately you will pay much less for your loan overall.
The Effect of PMI on Your DC Refinance
PMI is Private Mortgage Insurance and is usually an issue at the time of a home purchase but not during a DC refinance. However, because of the current situation with real estate values declining and equity amounts decreasing, more people are encountering this issue at the time of a refinance.
Private Mortgage Insurance is required at the time of a new home purchase loan if the borrower does not have a minimum of 20% of the home sale price to apply toward a down payment. Basically, PMI is insurance to protect the bank against default. The percentage of the loan rate for PMI could be as much as 1%, but once they achieve the equity balance the PMI gets terminated. This usually takes many years however, and the money is not refundable in any way. It does not get applied to your principal or interest either. It is simply extra money you will pay on your home loan. Ideally, PMI should be avoided whenever possible.
Home owners that had to pay PMI at the time of their first Washington DC mortgage will most likely have to pay PMI during a refinance as well. Unfortunately, some homeowners who did not start with PMI may find themselves needing it if they choose to refinance. If the equity is less than 20%, PMI will be required. With the value of so many homes dropping in today’s market, many homeowners are finding themselves with less equity than they had just a few years earlier.
Even if you need PMI, refinancing may still be a worthwhile endeavor. Rates are still low, ranging from 4.75% to 5.5%.
Compare Washington DC Refinance Rates Now!
Use our free Washington DC refinance rate finder on the top of the page so that you will be able to compare DC home loan interest rates and find a refinance option that will save you money on your monthly mortgage. Get started today!
