Refinancing My Home, Do I Need A New Appraisal?
Refinancing your home. Most people decide to refinance their homes to shorten their loan time frame or even to reduce their interest rate. There may be other reasons why you want to refinance your home.
But no matter what your reason may be, the question still stands, “Do I need a new appraisal when refinancing my home?” The answer is, it depends.
If you are getting ready to refinance your home, there are some things that you need to consider first.
Why You Need an Appraisal to Refinance
Let’s look at the refinancing process and why you need an appraisal to refinance in the first place.
The easiest way to explain it is when refinancing your home with your mortgage lender, they look at it as if you were closing out your old loan and applying for a new one.
This isn’t like adjusting for property taxes in which they take a look at your home and give you a rough number knowing that you have done this dance before. This truly is like getting a brand new mortgage loan.
You will need to apply to refinance, you will have fees and other costs like title search and an appraisal fee. Not to mention the loan principal cost. Refinancing is not a decision to be taken lightly.
You need to look at what refinancing your home will cost you and what the financial benefit of doing so will be. Weigh out the pros and cons before you start the process.
So Why Is the Appraisal Important?
The easiest way to answer that is by asking why is an appraisal ever important? An appraisal determines what the current market value of the home is. When you first purchased the home you needed to have an appraisal done, right?
That was because your mortgage lender needed to make sure that they were only loaning you what the home is worth. It is important for your mortgage lender to know what the home is worth (from a business standpoint), which is why they require an appraisal in order to approve your loan.
It would only make sense that if you are refinancing your home and your lender is going to be issuing you a new mortgage loan, they will require you to have another appraisal done on the property. It is their way of ensuring financial safety to them if anything should happen.
So, is it actually possible to refinance without an appraisal?
Refinancing Without an Appraisal
Yes, it is in fact possible to refinance your home without an appraisal. However, it is not an option for everyone.
When refinancing your home, you need to look at what kind of loan you currently have. FHA, VA (IRRRL), and USDA loans are an exception to the normal “must have an appraisal” rule.
These loans have certain requirements that you still need to meet in order to qualify for refinancing. For example, USDA loan refinance will require you to have had your loan for at least one year before being eligible, and you must meet USDA’s debt to income ratio.
For an FHA loan refinance you need to have a minimum of 6 payments on your loan thus far, and only one late mortgage payment in the past year.
And a VA or IRRRL (interest rate reduction refinance loan) requires you to have made your last 6 months of payment in full and on time (among other requirements).
These are just a few examples of the types of requirements you can expect when refinancing with one of these types of loans. The biggest, requirement to qualify for refinancing on one of these loans is something that they all have in common.
You must already have that type of loan. It doesn’t matter if you have an FHA, VA, or USDA loan and want to refinance without needing an appraisal. You just need to meet the loan refinance qualifications.
Need Help With an Appraisal?
If you are refinancing your home and need to have an appraisal done, we can help. You can get a free appraisal quote from us by using our online appraisal estimator tool.
With this free tool, all you need to do is click the link and answer the questions to the best of your knowledge. The more accurate you are with your answers the more accurate your quote will be.
You can also give us a call to learn more about the appraisal process, ask any questions you might have, or get scheduled for an appraisal. So give us a call at (941) 743-3700.