Refinance Your Home: No Appraisal?

One of the cornerstones of economic recovery, say our leaders, has to be refinancing. Homeowners need to be able to refinance to lower interest rates and more affordable payments in order to stem the tide of foreclosure, say our leaders. On top of that, it would be nice if the responsible folks, who want to take advantage of historically low interest rate, could also refinance.

There’s one snag to all of this: Home values have fallen, so a refinance is likely to get rejected when the appraisal comes through. If you have less than 20% equity in your home, then the chances of being turned down for a refinance go up. And with home values plunging, you may not have as much equity as you thought.

No appraisal mortgage refinancing may be the key

One of the ways that some mortgage lenders are trying to comply with the president’s foreclosure prevention plan is by offering no appraisal refinancing. In this type of refinance, an appraisal is not required for approval. Of course, with the latest plan for foreclosure prevention, if your loan is guaranteed by Freddie Mac or Fannie Mae, you should be able to get a refinance if you have less than 20% equity — as long as you don’t owe at least 5% of what your home is worth.

It’s an interesting thought, this no appraisal mortgage refinancing. Howeve, caution should be used. Some mortgage lenders are claiming that asset and income verification won’t be needed, either. And that’s part of what got us into this mess.

image sourse: respres via Flickr