There are multiple ways you can refinance your mortgage without getting an appraisal done. Today we’re covering the benefits and how to do a home refinance with no appraisal.
The idea of refinancing without having to get an appraisal is appealing for two main reasons.
Main benefits of not getting an appraisal done:
- Saves money
- Saves time
How does not getting an appraisal save you money?
It’s obvious that you save on the actual cost of the appraisal itself (usually $450 – $650 depending on where you’re located, and what type of property you’re refinancing).
But what about the other costs that can add up when an appraisal is done?
It’s not terribly uncommon for an appraiser to mark items to be repaired prior to closing.
If you don’t get an appraisal when you refinance, potential repairs won’t be required.
How do you save time when you refinance a mortgage without an appraisal?
Coordinating a convenient time for the appraiser to come out can be tricky. In this world of low rates, the market is crazy busy with refinance business as well as new home purchases.
Appraisers are extremely busy.
In some areas of the country, it is taking 2-3 weeks just to get the appraiser to come out and inspect the home. Then, another 2 weeks for the appraisal report completion.
Who has time for that kind of delay? Literally, no one.
To be fair, most areas are 7-10 day turn times. But still, if you have the opportunity to save that time, why wouldn’t you?
How to Refinance Mortgage without Appraisal
There are 3 ways to complete a home refinance without an appraisal.
Please keep in mind, guidelines are always changing. We’ll do our best to keep this updated with current market conditions.
Property Inspection Waiver | Conventional Mortgage
When refinancing into a conventional mortgage, there are cases when the lender will get a property inspection waiver (meaning no appraisal required on the refinance).
The property inspection waiver will be granted on a case-by-case basis when the lender runs your loan through the desktop underwriting system that all mortgage lenders use.
The system will generate the property inspection waiver based on strength of:
- Credit score
- Loan-to-value ratio (how much you’re looking to borrow vs. estimated value)
If you have a strong credit score and your loan-to-value ratio is low, you have a strong chance of approval for a refinance mortgage without appraisal.
With that said, not all lenders are created equal.
Even though everyone uses the same system(s) to get desktop underwriting findings, not all lenders will have the same outcome.
For that reason, you’ll want to work with a lender that is highly experienced with this.
Sometimes loan officers will try to get too aggressive with the estimated value, and the system doesn’t like it.
Sometimes loan officers don’t even try submitting the scenario to both Automated Underwriting Systems (Desktop Underwriter and Loan Prospector) to see if an appraisal waiver will be granted.
So again, the key is to work with someone who is extremely familiar with the appraisal waiver process.
Keep in mind. Even if you have perfect credit, and other strong factors, that does NOT guarantee you’ll get the appraisal waiver.
A refinance mortgage without appraisal on conventional is allowed on rate and term and cash out. Getting an appraisal waiver on a cash out refinance is extremely rare, but it does happen.
Streamline without Appraisal | FHA Loan
If you currently have an FHA loan, looking to do a streamline refinance into a lower interest rate, you do have an option to get it done without having to get an appraisal.
On an FHA streamline, you cannot roll in closing costs on the mortgage. So you either need to take a rate that has enough lender credits to cover costs, or you have to pay costs out of pocket.
Other benefits to FHA Streamline besides no appraisal:
- Low credit is okay
- No income verification
An FHA streamline is a great opportunity if you have been in your FHA loan for at least 6 months.
Interest Rate Reduction Refinance Loan | VA Mortgage
If you’re a veteran of the United States armed forces, thank you for your service to our country. Semper Fidelis.
An interest rate reduction refinance loan (IRRRL) is the VA loan version of a streamline.
It’s a simple way for eligible veterans to lower their interest rate on their VA mortgage without having needing an appraisal.
Other benefits to VA IRRRL besides no appraisal:
- You can roll in closing costs
- No income verification
To the veterans of this great nation, I appreciate you. The VA loan is an incredible tool for you to use to your advantage.
I encourage you to look into it further and reach out for guidance on any questions you may have.
In Summary
There are 3 basic ways to get approved to refinance mortgage without appraisal:
- Property inspection waiver on a Conventional Loan
- Streamline without appraisal on FHA mortgage
- Interest Rate Reduction Refinance on a VA loan
All three options have their pros and cons and may or may not work depending on your specific situation.
Work with a lender who is extremely experienced in these loans.
If you’re looking to refinance without an appraisal, I invite you to reach out.
I have approved many borrowers all over the country for a mortgage refinance without appraisal. If I can’t help, I’ll be happy to point you in the right direction at the very least.
I Invite you to reach out.
Ask all your questions.
We have helped many borrowers accomplish their home financing goals even when other lenders said no.
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