No-Appraisal Mortgage

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  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. Total Annual Loan Cost (TALC)

    The projected total cost that a reverse mortgage holder should ...
  6. Forbearance

    A temporary postponement of mortgage payments.
RELATED FAQS
  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. Can small investors buy collateralized mortgage obligations (CMOs)?

    Collateralized mortgage obligations (CMOs), which are pools of mortgage-backed securities (MBS), are available to smaller ... Read Full Answer >>
  4. What is the difference between an option-adjusted spread and a Z-spread in reference ...

    Unlike the Z-spread calculation, the option-adjusted spread takes into account how the embedded option in a bond can change ... Read Full Answer >>
  5. What are some historical examples of debt securitization?

    The first debt securities were probably sovereign debt assets that were transferred from the British government to mercantilist ... Read Full Answer >>
  6. What price-to-book ratio is considered average in the chemicals sector?

    You can use Microsoft Excel to calculate the loan-to-value ratio if you have the mortgage amount and appraised value of a ... Read Full Answer >>
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. Home & Auto

    What Are The Tax Advantages Of Buying A Home?

    Don't forget these deductions and credits that homeowners can use to reduce their tax bill.
  7. Credit & Loans

    Dos And Don'ts Of Selling A House

    Tips for selling your house in the shortest time possible and for the best price
  8. Credit & Loans

    How To Finance Foreign Real Estate

    If you don't pay cash, financing real estate abroad is likely to cost more than at home. Watch for local laws and be sure your rights are protected.
  9. Credit & Loans

    How The Federal Reserve Affects Mortgage Rates

    The Federal Reserve's actions as it aims to maintain economic stability impact the cost of funds for banks and consequently for mortgage borrowers.
  10. Credit & Loans

    Save? (Or Prepay Your Mortgage Or Student Loan?)

    With low-interest rate loans, you might be better off paying just your monthly minimum and investing whatever extra funds you have.

You May Also Like

Hot Definitions
  1. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  2. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  3. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  5. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
  6. Variance

    The spread between numbers in a data set, measuring Variance is calculated by taking the differences between each number ...
Trading Center