The refinance appraisal requirement can be nerve-wracking, especially if you live in an older home. But did you know that there are a few ways you can refinance your home with no appraisal?
In this article, well take a closer look at what an appraisal is and why mortgage lenders require them. Well also introduce you to a few limited scenarios where you might want to refinance your home without an appraisal.
FHA Streamline Refinance
Among other benefits like not having as much documentation involved, FHA Streamlines often have no appraisal associated with them because theres no minimum equity amount. Thats not to say there arent circumstances where an appraisal is required, but there are other benefits like getting your annual mortgage insurance premium (MIP) down to 0.5% of your loan amount.
- Is your existing mortgage an FHA loan?
- Have at least 210 days passed between the date of your previous mortgage closing and your new application?
- Have 6 months passed between the time your first mortgage payment is due and the close of your refinance?
- Have you made at least six payments on your current loan?
- Do you have no more than one late mortgage payment in the last year, and none in the previous 6 months?
In addition to these requirements, you cant do a cash-out refinance. Thats a commonality among all the options well talk about. You also must see what the FHA would consider a tangible net benefit from refinancing. These include lower payments, lower mortgage rates or moving to a fixed rate from an adjustable-rate mortgage for more stability.
Finally, even if youre lowering your rate or changing your term, there are restrictions around how much your rate can or must increase or decrease as well as how much your payment can go up. Your loan officer can get into the details with you on this.
VA Streamline Refinance
You line refinance if you have a VA loan. VA Streamline refinances are sometimes called interest rate reduction refinance loans (IRRRLs). While many IRRRLs dont include any type of appraisal, there are circumstances when one is necessary.
You can also refinance up to 120% of your loan value with an IRRRL, which is a good option if you owe more than your home is worth.
- You must already have a VA loan that you want to refinance.
- You must already live in the home that you want to refinance.
- You only plan to refinance to change your interest rate and/or term no cash-out refinances.
- Youve made at least six consecutive on-time payments on your VA loan.
You must also have a clear reason for refinancing. There are a number of reasons that can help you meet this refinancing requirement, from lower interest rates to a lower monthly payment. With some differences, these are like the FHA tangible net benefit rules. Keep in mind that not every lender who offers VA loans also offers IRRRLs.
USDA Streamline Refinance
The USDA also offers Streamline refinance options for homeowners with a USDA loan. Rocket Mortgage ® does not currently offer full USDA or USDA Streamline loans.
USDA Streamline refinances allow you to skip the appraisal requirement when you refinance your rate or term. Like VA IRRRLs, USDA Streamlines also have a strict set of criteria you must meet to qualify.
USDA Streamline-Assist Refinance
You line-assist refinance. Streamline-assist refinances are the most favorable option for homeowners, as they dont require a high New Jersey car and title loans credit score, appraisal or minimum DTI ratio. You could also have reduced closing costs when using this type of refi. Rocket Mortgage currently doesnt offer USDA Streamline-Assist refinance options.
The Bottom Line: Appraisal Waiver Refinances Can Simplify The Process
An appraisal is a basic assessment of your homes value. Your appraisal value is derived from several factors, ranging from local property values to your homes overall physical condition. Most lenders require that you get an appraisal or another form of real estate valuation before you refinance to ensure they arent loaning you too much money for your property.
You may not need an appraisal to refinance your loan if you have an FHA, VA or USDA loan. In many cases, you line refinance that actually cuts out the appraisal requirement.
Each loan type has its own standards when it comes to who qualifies. Keep in mind that you can only refinance your interest rate or term with a Streamline. You cannot get a cash-out refinance without an appraisal.