No-Appraisal Loan


DEFINITION of 'No-Appraisal Loan '

A mortgage that does not require an appraisal of the property’s current market value. A no-appraisal loan may use alternative methods of determining a home’s value for the purpose of defining how much money to lend, or it may not require professional assessment of the home’s current market value, just information on the borrower’s loan balance.

BREAKING DOWN 'No-Appraisal Loan '

Most mortgages do require appraisals. Some examples of no-appraisal loans include the FHA streamline refinance, for homeowners who have existing Federal Housing Authority mortgages and want to refinance into another FHA loan; the Home Affordable Refinance Program (HARP), for borrowers with conventional mortgages owned by Fannie Mae or Freddie Mac who are struggling to afford their monthly payments; the USDA streamline refinance, sometimes used in rural areas, for borrowers who want to refinance their existing U.S. Department of Agriculture loan into a new USDA loan; and Veteran’s Administration streamline refinances, officially called VA Interest Rate Reduction Refinance Loans (IRRRL), for qualifying U.S. military service members refinancing an existing VA loan into a new VA loan.

No-appraisal loans have several benefits for homeowners. They save the homeowner several hundred dollars that they would normally have to pay an appraiser, they eliminate a potentially stressful step from the home-financing process, and they also make it possible, in some cases, to refinance a mortgage even when the homeowner is underwater (the home's value drops below the loan amount). Without a no-appraisal loan, these homeowners would be ineligible to refinance.

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  1. Do FHA loans require escrow accounts?

    Federal Housing Administration (FHA) loans require escrow accounts for property taxes, homeowners insurance and mortgage ... Read Full Answer >>
  2. Do FHA loans have prepayment penalties?

    Unlike subprime mortgages issued by some conventional commercial lenders, Federal Housing Administration (FHA) loans do not ... Read Full Answer >>
  3. Can FHA loans be refinanced?

    Federal Housing Administration (FHA) loans can be refinanced in several ways. According to the U.S. Department of Housing ... Read Full Answer >>
  4. Can FHA loans be used for investment property?

    Federal Housing Administration (FHA) loans were created to promote homeownership. These loans have lower down payment requirements ... Read Full Answer >>
  5. Do FHA loans have private mortgage insurance (PMI)?

    he When you make a down payment from 3 to 20% of the value of your home and take out a Federal Housing Administration (FHA) ... Read Full Answer >>
  6. How many FHA loans can I have?

    Generally, the Federal Housing Administration (FHA) does not insure more than one mortgage per borrower. This is to prevent ... Read Full Answer >>

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