No-Appraisal Mortgage


DEFINITION of 'No-Appraisal Mortgage '

A type of home loan used for refinancing for which the lender does not require an independent opinion of the property’s current, fair market value. A no-appraisal mortgage does not consider for how much similar homes have recently sold or whether housing prices in the subject property’s local market are increasing, declining or flat.

BREAKING DOWN 'No-Appraisal Mortgage '

With a no-appraisal mortgage, the lender extends credit based on what the borrower owes on his or her existing mortgage. In the United States, no-appraisal mortgages are only used with refinance loans that help lower-income or financially struggling homeowners and with loans offered to qualifying current and former members of the military as a benefit of their service.

The four options for a no-appraisal mortgage are: 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 mortgages help homeowners who otherwise would not qualify for a refinance because their home has declined in value since they purchased it, causing them to owe more than the property is now worth. These refinances make it possible for such homeowners to lower their monthly payments and save thousands, perhaps tens or hundreds of thousands of dollars, in interest over the life of the mortgage. Some no-appraisal mortgages also do not verify the applicant’s income or employment status, making them helpful to homeowners who have lost their jobs or otherwise experienced a reduction in income.

  1. Home Affordable Refinance Program ...

    A mortgage refinancing program offered by the Federal Housing ...
  2. FHA Streamline Refinance

    A mortgage-refinancing option offered by the Federal Housing ...
  3. USDA Rural Refinance Pilot Program

    A mortgage-refinancing option offered in some states and territories ...
  4. Interest Rate Reduction Refinance ...

    A mortgage refinancing program offered by the U.S. Department ...
  5. Encumbrance

    A claim against a property by a party that is not the owner. ...
  6. Equity

    Equity is the value of an asset less the value of all liabilities ...
Related Articles
  1. Home & Auto

    Should You Cash Out When You Refinance?

    If you want to cash out, make sure you’re doing it for the right reasons.
  2. Home & Auto

    4 Reasons Not To Refinance Your Home

    Interest rates are still extremely low, but they aren't expected to stay there for long. Should you refinance before it's too late? Not necessarily.
  3. Home & Auto

    6 Questions To Ask Before You Refinance

    Refinancing your mortgage can be a quick way to save on payments, but it's not for everyone.
  4. Credit & Loans

    7 Bad Reasons To Refinance Your Mortgage

    When low mortgage rates are everywhere, it might seem like a good time to refinance. Make sure you are doing it for the right reasons.
  5. Credit & Loans

    9 Things To Know Before You Refinance Your Mortgage

    Whether or not a mortgage refinance is right for you depends more on individual circumstances than this week's mortgage interest rates.
  6. Insurance

    What is a Force Majeure?

    A force majeure clause frees both parties in a contract from fulfilling their obligations in the event of some catastrophic or unexpected occurrence.
  7. Credit & Loans

    Explaining Equated Monthly Installments

    An equated monthly installment is a fixed payment a borrower makes to a lender on the same date of each month.
  8. Investing Basics

    Tiny House Movement: Making Market Opportunities

    The tiny house movement throws all assumptions about household budgeting and mortgage management out the window, and creates new market segments too.
  9. Investing

    Where Should I Keep My Down Payment Savings?

    While saving up for a down payment, where should you keep your money. A bank? The stock market? It all depends on your timeline.
  10. Credit & Loans

    Questions To Ask Your Mortgage Lender

    When buying a house, avoid nasty surprises by asking the right questions about your mortgage lender's qualifications and the mortgage process.
  1. How do I know if I should refinance my mortgage?

    The typical rule of thumb is that if you can reduce your current interest rate by 0.75-1% or higher then it might make sense ... Read Full Answer >>
  2. When would a corporation want to refinance its debt?

    Favorable market conditions or the strengthening of a company's credit rating may lead to the refinancing of corporate debt. ... Read Full Answer >>
  3. What is the difference between "closed end credit" and a "line of credit?"

    Depending on the need, an individual or business may take out a form of credit that is either open- or closed-ended. While ... Read Full Answer >>
  4. In what instances does a business use closed end credit?

    The most common types of closed-end credit used by both businesses and individuals are mortgages and auto loans. Businesses ... Read Full Answer >>
  5. What are the long-term effects of delinquent accounts?

    Delinquency occurs when borrowers fail to make payments on their loans. All loan borrowers should do their best to avoid ... Read Full Answer >>
  6. How was the American Dream impacted by the housing market collapse in 2008?

    The American Dream was seriously damaged by the housing market collapse in 2008. In many ways, the American Dream is a self-fulfilling ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Real Estate Investment Trust - REIT

    A REIT is a type of security that invests in real estate through property or mortgages and often trades on major exchanges ...
  2. Section 1231 Property

    A tax term relating to depreciable business property that has been held for over a year. Section 1231 property includes buildings, ...
  3. Term Deposit

    A deposit held at a financial institution that has a fixed term, and guarantees return of principal.
  4. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  5. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  6. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!