About No-Appraisal Refinancing:
No-appraisal refinancing is a type of mortgage that replaces an existing loan on a residence where the lender does not require an independent, professional assessment of a home’s value to extend a new mortgage. A home appraisal determines the fair market value of a property and helps the lender determine that borrowers are not asking for more money than a home is worth.
Private lenders, such as banks and mortgage companies, commonly require appraisals to refinance. However, the lender may waive the refinance appraisal if borrowers have a Federal Housing Administration (FHA), Department of Veterans Affairs (VA), or U.S. Department of Agriculture (USDA) loan.1
- No-appraisal refinancing replaces an existing mortgage on a residence and does not require a new home value assessment.
- Homeowners typically choose no-appraisal refinancing when they are unlikely to qualify for a new standard loan.
- No-appraisal refinancing is available from government agencies, including the Federal Housing Administration, Veterans Administration, and the Department of Agriculture.
Understanding No-Appraisal Refinancing:
No-appraisal refinancing is good for homeowners but risky for lenders. Homeowners typically choose no-appraisal refinancing when they are unlikely to qualify for a new loan that requires an appraisal. No-appraisal refinancing is available from several government sources:
- The Federal Housing Administration (FHA) streamlined refinance
- The Veterans Administration (VA) streamlines refinances or interest rate reduction refinance loans2
- The U.S. Department of Agriculture streamlined refinancing
- Fannie Mae’s “RefiNow” program and Freddie Mac’s “Refi Possible” program
Benefits of an Appraisal:
Borrowers may be better off refinancing with a loan that requires an appraisal. For borrowers paying private mortgage insurance (PMI) due to a down payment of less than 20% of the purchase price, an appraisal may show the home’s value has increased and could void the PMI requirement on the new loan. The equity increase can also earn a lower interest rate on the refinanced mortgage.