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.

Investopedia explains '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.



comments powered by Disqus
Hot Definitions
  1. Degree Of Financial Leverage - DFL

    A ratio that measures the sensitivity of a company’s earnings per share (EPS) to fluctuations in its operating income, as a result of changes in its capital structure. Degree of Financial Leverage (DFL) measures the percentage change in EPS for a unit change in earnings before interest and taxes (EBIT).
  2. Jeff Bezos

    Self-made billionaire Jeff Bezos is famous for founding online retail giant Amazon.com.
  3. Re-fracking

    Re-fracking is the practice of returning to older wells that had been fracked in the recent past to capitalize on newer, more effective extraction technology. Re-fracking can be effective on especially tight oil deposits – where the shale products low yields – to extend their productivity.
  4. TIMP (acronym)

    'TIMP' is an acronym that stands for 'Turkey, Indonesia, Mexico and Philippines.' Similar to BRIC (Brazil, Russia, India and China), the acronym was coined by and investor/economist to group fast-growing emerging market economies in similar states of economic development.
  5. Pension Risk Transfer

    When a defined benefit pension provider offloads some or all of the plan’s risk – e.g.: retirement payment liabilities to former employee beneficiaries. The plan sponsor can do this by offering vested plan participants a lump-sum payment to voluntarily leave the plan, or by negotiating with an insurance company to take on the responsibility for paying benefits.
  6. XW

    A symbol used to signify that a security is trading ex-warrant. XW is one of many alphabetic qualifiers that act as a shorthand to tell investors key information about a specific security in a stock quote. These qualifiers should not be confused with ticker symbols, some of which, like qualifiers, are just one or two letters.
Trading Center