In trying to makes sense of advertising of mortgage company ads, one will hear many things. Today we will discuss what it actually means when someone says they can refinance your home without an appraisal.
Is a No Appraisal Refinance Possible?
Yes, it absolutely is. Currently, approximately 10% of our mortgage refinance transactions are done without an appraisal. In addition to saving the $350-$500 cost of the appraisal, the transaction can move faster due to many appraisers being backlogged, Currently, the refinance transactions that are done without an appraisal comes down to either conventional HARP loan or an FHA streamlines.
Conventional HARP Loans
HARP or the Home Affordable Refinance Program is a program for homeowners that owe more than their home is worth to help them refinance.
What is required?
Your mortgage must have been before May of 2009 and owned by either FNMA(Fannie Mae) or FHLMC(Freddie Mac). You can find out if you r mortgage is owned by Fannie Mae or Freddie Mac by entering your address on their respective websites. www.fanniemae.com and www.freddiemac.com.
You must then apply with a participating licensed mortgage lender and be approved by the respective Automated Underwriting System. For Fannie Mae, it is Desktop Originator(DO) and for Freddie Mac, it is called Loan Prospector(LP) which then grants the waiver of appraising the home. The waiver from either DO or LP is based on the overall underwriting criteria of stronger credit, income as well as the data available for the home.
So to conclude, it all boils down to what the computer says.
FHA Streamlines
FHA, has a built in process to allow homeowners to refinance their mortgage without an appraisal. The name of the transaction is a “streamline”, and you can do one with, or without an appraisal. The main difference is if the borrower does or does not have the money to pay for closing costs and if the home will or will not appraise for the same value from the prior transaction.
What is required?
Your existing mortgage must be currently insured by FHA.. You can normally find this on your mortgage statement.
You must have a job and a score above 640(in most cases) to be approvable when you apply with your FHA approved lender.
To conclude: the “no appraisal required” isn’t marketing hooey, there are many that are done everyday and to great benefit.