A great question came in last week. Someone asked, “How hard is it to get a mortgage without an appraisal?” Maybe the answers will surprise you, since there are actually several options out there.
You’d think that in buying a house these days you’d need to have a full appraisal. It isn’t always the case. Fannie Mae sells the homes they’ve foreclosed on through their portal called Homepath.com. The houses listed there can be purchased using the HomePath mortgage, which requires neither an appraisal nor mortgage insurance. Even if you’ll use the home as a rental or vacation place, no appraisal is required. You do pay a bit more for this loan type but it’s a nifty way to get around value or repair issues. This morning a search of the site yields 21 properties in our zip code which could conceivably be purchased without needing an appraisal.
For current homeowners, both FHA and VA offer “streamline” refinances that don’t require an appraisal. Both programs require that you have an existing FHA or VA loan, that you’re current on your house payments, and that there is a payment reduction. To clarify, you can’t go from a conventional loan to a streamline FHA or VA – We’re just rewrites the existing government loan for better terms. The best of these programs is for homeowners who have an FHA loan taken before May 2009. These folks pay really cheap mortgage insurance and can save a boatload of money. If that’s you, call today to ask about refinancing.
If your mortgage was taken before May 2009 and it’s held by Fannie Mae or Freddie Mac, you might be eligible for the Home Affordable Refinance Program. It doesn’t matter who collects your monthly payments, we’re looking for who owns the underlying mortgage. To find out if you might qualify, go to MakingHomeAffordable.gov and look under the “Tools” tab for “Does Fannie or Freddie Own Your Loan”. You’ll be asked for your name, address, and last four digits of your social security number. What returns is the answer to whether your loan was acquired by Fannie or Freddie, and the acquisition date.
HARP allows for an appraisal waiver for loans owned by Fannie Mae. If you don’t already have monthly mortgage insurance, you won’t have it on the new loan. This is a fully qualifying loan for credit and income, but the appraisal waiver piece is pretty great for those wanting to lower their interest rate and payment.
Loans owned by Freddie Mac usually need an appraisal, since their automated appraisal system changes the automated value every day. Still, there are programs that allow Freddie loans to be refinanced if you owe more than your home is worth.
These programs are saving your neighbors hundreds of dollars in monthly mortgage expense. Shouldn’t you check them out for yourself?