No-Appraisal Refinancing


DEFINITION of 'No-Appraisal Refinancing '

A type of mortgage for which the lender does not require an independent, professional opinion of the home’s value as a condition of extending a new mortgage with more favorable terms to replace an existing mortgage with less favorable terms. No-appraisal refinancing is available for Federal Housing Administration streamline refinances, Veterans Administration streamline refinances (also called Interest Rate Reduction Refinance Loans), U.S. Department of Agriculture streamline refinances and Home Affordable Refinance Program refinances.

BREAKING DOWN 'No-Appraisal Refinancing '

Homeowners typically choose no-appraisal refinancing when they would not qualify to refinance if the lender did perform an appraisal. Homeowners could find themselves in this situation if their home’s value has declined since they purchased it and they now owe more on their mortgage than the property is worth.

Otherwise, there are several reasons why a homeowner would likely be better off refinancing with a loan that does require an appraisal. If they are currently paying private mortgage insurance (PMI) because they made a down payment of less than 20%, an appraisal that shows the home’s value has increased since the date the existing mortgage was taken out could allow the homeowner to avoid PMI on the new loan. That would happen if the increase in market value plus the amount of principal they have paid down have increased their equity to 20% or more. This increase in equity can also give borrowers a lower interest rate since a lender will consider them lower risk; borrowers with more equity are less likely to walk away from their homes.

Many homeowners are not eligible for one of the four no-appraisal refinance programs; taking a chance on an appraisal may be their only shot at refinancing. All the same, there is no guarantee that the appraiser’s opinion of the home’s value will be high enough to allow the borrower to refinance or to eliminate PMI. Borrowers who risk a refinancing that requires an appraisal must be willing to take the risk of paying a several-hundred-dollar fee with no guarantee of achieving their goal.

  1. USDA Streamlined Refinancing

    A mortgage-refinancing option offered by the United States Department ...
  2. Refinancing Risk

    1. The risk that an early unscheduled repayment of principal ...
  3. Corporate Refinancing

    The process through which a company reorganizes its debt obligations ...
  4. Encumbrance

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

    Equity is the value of an asset less the value of all liabilities ...
  6. Chattel Mortgage Non-Filing Insurance

    An insurance policy covering losses that result from a policyholder ...
Related Articles
  1. Credit & Loans

    6 Questions To Ask Before Refinancing Your Mortgage

    Refinancing can improve your short-term cash flow while also increasing your long-term net worth.
  2. Credit & Loans

    How Mortgage Refinancing Affects Your Net Worth

    Find out how to determine whether refinancing will put you ahead or even more behind.
  3. Home & Auto

    How To Keep Costs Low When Refinancing Your Home

    With interest rates still being relatively low, now is a great time to capitalize on refinancing your home. Be aware of what fees are involved in a refinance, and how to keep these costs low.
  4. Home & Auto

    Re-Amortizing Or Refinancing Your Home

    Re-amortization is a lesser known alternative to refinancing when it comes to dealing with your mortgage.
  5. Savings

    How Parents Can Help Adult Children Buy a Home

    Owning a home isn't easy thanks to stringent lending standards. Thankfully, there's ways parents can help their kids buy a home.
  6. Credit & Loans

    HARP Loan Program: Help for Underwater Mortgages

    If you are underwater on your mortgage, this program may be just what you need to help build up equity in your home.
  7. Insurance

    6 Reasons To Avoid Private Mortgage Insurance

    This costly coverage protects your mortgage lender - not you.
  8. Credit & Loans

    Pre-Qualified Vs. Pre-Approved - What's The Difference?

    These terms may sound the same, but they mean very different things for homebuyers.
  9. Home & Auto

    9 Things You Need To Know About Homeowners' Associations

    Restrictive rules and high fees are just some of the things to watch out for before joining an HOA.
  10. Credit & Loans

    Adjustable Rate Mortgage: What Happens When Interest Rates Go Up

    Adjustable rate mortgages can save borrowers money, but they can't go into it blind. In order to benefit from an ARM, you have to understand how it works.
  1. 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 >>
  2. 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 >>
  3. 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 >>
  4. 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 >>
  5. 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 >>
  6. Are FHA loans assumable?

    Loans insured by the Federal Housing Administration (FHA) on or after Dec. 15, 1989, are assumable by qualifying borrowers. ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  4. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  5. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
  6. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning ...
Trading Center