Can You Refinance a Home With an Appraisal?
A home mortgage refinancing requires an ample amount of paperwork, including an appraisal. However, a homeowner cannot qualify or close on a mortgage with just an appraisal.
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Significance
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A refinance is a renegotiation of the terms and rate on a mortgage. It is a whole new loan on the house and requires the same paperwork, if not more, than the purchase of the home originally.
Types
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The appraisal needed on the home will vary based upon the type of mortgage purchased. A government loan, such as a VA, USDA or FHA loan, will require a much more thorough appraisal than a conventional loan underwritten by Fannie Mae or Freddie Mac.
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Time Frame
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In most situations, the appraisal cannot be older than three months to get a government or conventional mortgage. However, in the instance of certain very specific FHA loans, a borrower may forgo the appraisal requirement with an FHA to FHA refinance with no cash out.
Features
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An appraisal will measure the home's square footage and number of rooms. It will compare this information, along with the condition of the home, to recent sales within a 1-mile radius. If the appraisal does not meet the lender's guidelines or if it shows significant problems with the home, it could cause the loan to be rejected.
Considerations
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If the borrower financed close to 100 percent at the purchase of the home and the values of homes in his area have fallen due to the economy, unless several years have gone by from the purchase of the home, the appraisal may be too low for the borrower to refinance.
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References
- Photo Credit Image by Flickr.com, courtesy of Jeff Turner
