Home appraisals are a valuable tool for homeowners who are pursuing a refinance. Refinance appraisals are used to assess a home’s value, determine the limits of cash-out refinancing, and establish how risky lenders will view the loan Homeowners should consider getting their home appraised in the process of refinancing because it helps protect their equity and get the most out of their loan.
Are Appraisals Different For Refinances?
Appraisals are used during the homebuying process to assess the value of the home and make sure that the purchase price is fair. When homeowners are refinancing, lenders use appraisals to verify the value of the property they are lending against. The appraisal homeowners get during their refinance will consider housing market conditions to estimate how much equity homeowners have earned.
Do All Refinances Require An Appraisal?
There are some refinance loans that do not require an appraisal. However, most refinances will require an appraisal regardless of the amount of equity homeowners have built up.
There are two loan programs that do not require a new appraisal when refinancing:
When homeowners refinance an existing FHA or VA loan into another FHA or VA loan, they can take advantage of a streamlined refinance (IRRRL) that does not require homeowners to get a new appraisal. Both programs also require less paperwork and are excellent options for homeowners with FHA and VA loans.
Homeowners can also get an appraisal waiver if they are pursuing a conforming rate/term refinance. A conforming rate/term refinance is a refinance with no cash-out and has a loan amount below the county loan limit.
Most Bay Area counties have a limit of $765,600. The entire state of Texas has a limit of $510,400. Unlike the VA and FHA streamline refinances, an appraisal waiver is not guaranteed. Mortgage lenders can run a homeowner’s refinance application through Fannie and Freddie’s automated underwriting software to determine if an appraisal waiver is possible.
While these waivers mostly apply for “rate/term” refinances where homeowners are not increasing their loan amount, it can be possible to get an appraisal waiver for cash-out refinances.
At JVM Lending, Mortgage Analysts always run every refinance application through both Fannie and Freddie’s underwriting software to increase the likelihood of homeowners obtaining an appraisal waiver.
Thinking About Refinancing?
Are you considering refinancing your home? This blog covers the very basics of refinancing appraisals. If you are interested in refinancing your home, getting pre-approved to buy a new home, or would like to speak with one of JVM Lending’s expert Mortgage Analysts, you can contact us by phone at (855) 855-4491 or by email at [email protected].