Can I Refinance Without an Appraisal?

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Are you looking to refinance a real estate loan? Are you trying to avoid an appraisal? Sometimes, homeowners don’t want to go through the hassle of appraisals when refinancing their loan.

Although an appraisal is required in many situations, there are a few types of no-appraisal refinance options. 

In this article, we’ll explore how the type of refinance impacts the appraisal requirement, cover the no-appraisal refinance options, and discuss the likelihood of bypassing the appraisal requirement. 

The Type of Refinance Impacts the Appraisal Requirement 

Your underlying reason for refinancing will impact the appraisal requirement. For example, almost all lenders will require an appraisal if you are looking to refinance and pull out equity.

This is true for most refinances that secure funds on top of the existing mortgage, such as a cash-out refinance. 

Another reason that homeowners refinance is to alter the terms of their loans. Lowering the interest rate, changing the repayment term, and eliminating PMI are all factors that a refinance can alter. 

Remember, an appraisal evaluates your property’s condition and fair market value. If you are looking to bypass an appraisal to borrow more money than your home is worth, you could get into a sticky situation when it comes time to sell your property. 

No-Appraisal Refinance Options

No-appraisal refinance options exist; however, they may be more difficult to obtain. Let’s cover a few of the no-appraisal refinance options. 

FHA Streamlined Refinance

FHA Streamlined generally has no appraisal requirement because they mandate a minimum equity amount. One of the benefits of pursuing an FHA Streamline refinance is the reduction of your annual mortgage premium down to 0.5%.

To qualify for this refinance program, you must meet the following requirements:

  • Your loan is through the FHA. 
  • At least 210 days have passed since your initial mortgage date. 
  • You have made six months of mortgage payments. 
  • You have not made more than one late payment in the past year and have made none in the last six months. 

It’s important to note that FHA Streamline does not allow cash-out refinances. This no-appraisal refinance method is primarily used to adjust the terms of your mortgage. 

VA Streamline Refinance

The VA Streamline refinance is another no-appraisal refinance option. This refinance type is commonly called an Interest Rate Reduction Refinance Loan.

Unlike FHA Streamline, VA Streamline allows you to refinance up to 120% of your home’s value, allowing you to access equity in your property. This is not the same as a cash-out refinance. Here are the requirements for this refinance option: 

  • Your loan is with the VA. 
  • You live in the home you are refinancing. 
  • You are refinancing to change your interest rate or loan term. 
  • You made a minimum of six consecutive, on-time payments. 
  • At least 270 days have passed since the initial mortgage date. 

Not every lender will offer VA Streamline refinance options, and cash-out refinances aren’t allowed. However, if you’re looking to adjust the terms of your loan or pull out a little equity, this can be a great no-appraisal option. 

USDA Streamline Refinance

The USDA Streamline refinance targets current USDA loan holders. When looking to refinance your rate or term, you can bypass the appraisal requirement.

Like many of the other loan programs, there are strict eligibility requirements that must be met, including: 

  • Your loan is with the USDA. 
  • You have made at least six months of on-time payments. 
  • You have had your USDA loan for at least 12 months. 
  • You meet the debt-to-income requirements. 
  • You are refinancing your rate or term. 

The USDA Streamline refinance program does not allow cash-out refinances, but this can be a viable option if you are trying to alter the terms of your loan. 

USDA Streamline-Assist Refinance 

The USDA Streamline-Assist refinance program is similar to the USDA Streamline program, with a few notable differences. For one, this program eliminates the minimum debt-to-income (DTI) requirements and does not require a high credit score.

In addition, closing costs are lower with this program. Here are the requirements for the USDA Streamline-Assist refinance program: 

  • The same individuals are on the loan as before. 
  • The refinance will result in at least $50 cost savings per month. 
  • You have had your USDA loan for at least 12 months. 
  • You have made 12 months of on-time payments. 

USDA Streamline-Assist refinances remove some of the stringent credit score and DTI requirements. Nevertheless, they are only applicable if you expect to gain at least $50 in monthly cost savings with the refinance. 

Fannie Mae and Freddie Mac

For loans not taken out through the FDA, VA, or USDA, the default is a Fannie Mae or Freddie Mac loan. These two loan programs also have refinancing capabilities with no appraisal requirement, known as an Automated Valuation Method (AVM).

An AVM is a home valuation service that leverages computer data to generate your property’s estimated fair market value. 

Using an AVM can lead to an appraisal waiver in your refinance if Fannie Mae and Freddie Mac agree with the estimated value. One of the main differences between an AVM and an appraisal is that an AVM is generally free, while an appraisal can range from $500 to $1,000. 

To get an AVM, you must work with a mortgage lender who uses the system. In addition, you must have a strong credit score, have equity in the home, and be refinancing your primary single-family home or condo. 

Eligibility is also based on your loan-to-value (LTV). This ratio calculates the amount of your mortgage to the property’s value. Primary residences must have an LTV of 70%.

For example, if your primary home is worth $100,000, your loan must be $70,000 or less. 

The Bottom Line

Refinancing without an appraisal is possible. First, you need to know which department your loan is through.

Then, you need to determine if you meet the eligibility criteria. For more information about your refinancing eligibility, contact a qualified lender.

Sean Bryant

Sean Bryant is a Denver-based freelance writer specializing in personal finance, credit cards, and real estate. With more than 15 years of writing experience, his work has appeared in many of the industry’s top publications including Time and Investopedia . He holds a Bachelor of Arts degree in economics.

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