That's right, you heard correctly. You can still get a loan without getting an appraisal. How do you do that you might ask? It's called the FHA streamline refinance. Without an appraisal.
You may have heard of the FHA streamline without an appraisal, it is certainly not new, but with the current state of the mortgage market and home values, this loan matters more now than ever before. Most people are familiar with the streamline that requires an appraisal. An appraisal is required when a borrower is looking to included their closing costs in the new loan amount. Actually, an appraisal is mandatory when doing that. Because closing costs are not being included in the loan amount, there is no appraisal required.
Now I know what you are thinking. If you can't include closing costs and prepaid expenses in the loan amount, the borrower will have to come out of pocket for thousands of dollars for closing costs, money which most borrowers don't have to spare. I say wrong. Allow me to explain. This is where being a broker gives me a distinct advantage over other lenders out there.
Because I am a broker, I get wholesale interest rates. And believe it or not, yield spread premium still exists, its just not called that anymore. It is now called a borrower credit. Fair enough, call it what you will. The way I structure the loan, I use the credit from the lender to pay not only my broker fee, but to also pay the closing costs and prepaid expenses on the new loan. All that I ask of the borrower is that they bring their mortgage payment to closing. This helps defray some of the costs, and this is money that was already budgeted to make the payment on the existing mortgage. It's a win-win.
The borrower gets a lower mortgage payment, does not increase their loan amount (although in some cases the loan amount does increase a little), and I close a loan that is all benefit and no downside. This loan was created for this very reason; to make it easy for someone to take advantage of lower mortgage rates with incurring a lot of expense. Well, mission accomplished.
I urge anyone that has an FHA loan with an interest rate above 5% to consider this loan. There is no cost or obligation when looking into getting this loan. Like the title says, you dont need an appraisal.
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