The No Appraisal Refinance
Are you thinking of refinancing your mortgage but the process along with the closing costs involved are holding you back? You can remember when you got your first mortgage you were a bit surprised at the amount of paperwork involved and how many different services were needed in order to close your loan. We understand that completely. But when refinancing an existing mortgage there are ways to reduce your closing costs and one of them is waiving the requirement for a brand new appraisal, saving you a few hundred dollars. How can that happen? Don’t lenders need to know what your home is worth before approving a loan application?
There are a couple of ways. Loans today receive their initial approval through an automated underwriting system. Lenders digitize your loan application and submit it through the portal and in just a few moments your loan is preapproved and a list of required documentation is provided. When refinancing, one of the pieces of required documentation you thought would be there is not…the appraisal. The appraisal requirement has been removed based upon various factors of your profile and the lender approves your loan using the Home Affordable Refinance Program, or HARP. HARP guidelines waive the requirements for an appraisal. There are some qualifying guidelines you’ll need to pay attention to and your loan officer can explain them to you.
Government-backed home loan programs also have a reduced documentation approval typically referred to as a “streamline.” There are three such programs, VA, FHA and USDA and each has its own version of the streamline but they all share some basic characteristics.
First, the existing loan being refinanced must be the same type of program. You need to refinance an existing VA loan with a new VA loan. FHA to FHA, and so on. You won’t need an appraisal and you won’t need a lot of other things as well. Streamlines don’t require employment or income verification, either so not only will you not need an appraisal but there is much less documentation involved. There is no minimum credit score requirement but you can expect the lender to make sure you’re current on your mortgage, there are no late payments within the past six months and no more than one such payment within the last 12.
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