In part one of this two-part blog series, we went over some basics on a relatively rare and unique situation in homebuying, but one that does take place: The no-appraisal mortgage loan. This type, where the home is not appraised in a typical fashion ahead of sale, are not common on residential properties, but may still happen in certain situations.
At Altius Mortgage and our partners with Mortgage Ogden, we’re happy to offer a wide range of home loan options, from numerous programs for first-time homebuyers to options for mortgage refinancing and several other areas. What might be some of the benefits of considering a no-appraisal loan in unique circumstances, how can you figure out if you’re eligible for this to begin with, and which other factors should you be considering before moving forward? Here are some basics.
Benefits of No-Appraisal Loans
For those who are eligible and fit the criteria, the primary benefit of a no-appraisal loan is cost savings. Homebuyers are generally the ones who are responsible for the costs of an appraisal, which tends to cost several hundred dollars at minimum – when no appraisal is necessary, this is a cost that’s avoided.
In addition, no appraisal often allows mortgage situations to close faster. There’s no more need to schedule and appraiser, work around their schedule, plus wait multiple days for their report. In fact, one of the most common instances where this no-appraisal format is considered is when a quick closing date is required by both parties within the mortgage situation.
Eligibility for Appraisal Waivers
Fannie Mae has created rules and guidelines that state who is and is not eligible for an appraisal waiver or other forms of no-appraisal loan. Here are their regulations:
- You must be a strong borrower with an excellent credit score
- You must be able to prove your available assets
- The dwelling must meet certain qualifications
- You must meet certain LTV ratios based on the type of property
- There may be disqualifications for certain property types, including multi-family units or those in disaster-impacted areas
- Appraisal waiver can be denied anytime the lender has a reasonable belief an appraisal is necessary
Before going down this path, it’s vital you understand exactly what the ramifications might be. It’s possible your home’s actual value will be significantly lower than the purchase price you’re paying – this is a risk you take, and you cannot hold the lender or the seller liable for an incorrect valuation later on. Ensure you know your rights and have discussed this with your lender and realtor before proceeding.
For more on no-appraisal loans, or to learn about any of our mortgage rates or other mortgage services, speak to the staff at Altius Mortgage today.