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 ...
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  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. Do FHA loans require escrow accounts?

    Federal Housing Administration (FHA) loans require escrow accounts for property taxes, homeowners insurance and mortgage ... Read Full Answer >>
  4. 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 >>
  5. 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 >>
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    Federal Housing Administration (FHA) loans were created to promote homeownership. These loans have lower down payment requirements ... Read Full Answer >>

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