July 6, 2017
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.
For more information or questions about mortgage loans, please call (855) 757-8748.