No, the virtual image is not formed only in our minds. That's why we can photograph it. It'a a real thing, the "virtual" nomenclature only means the rays of light merely appear to converge from some point in space, but don't actually come from that point (they come from above the water, while they appear to come from below the water). This is opposed to a "real image", where the rays of light come from where they converge. The only difference between real and virtual images is that you can project (on a screen, film, sensor, what have you) a real image, but you can't directly project a virtual image. From "the outside" real and virtual images appear and behave the same.