FHA Refi and Appraisal

Currently trying to refi to lower interest rates in my FHA loan. Bought the property back in July 2008 for $153K at which time the mortgage company appraised the value of the duplex at $188K. I’ve already put over $20K in repairs/upgrades into the house and I currently owe $149K and want to refi to take advantage of the current low rates. My LO says he’s running into a problem with the current appraisal because of a couple foreclosed duplexes in my town that are selling for a good discount and the appraisers are apparently using them for comps. The LO says that it’s driving down my property value for appraisal purposes. I live in a very stable area that you could count the foreclosures on one hand. How do I get the appraiser to stop looking at these foreclosures for comps? Any ideas?

When I was selling Real Estate I used to do my own Comparables. I would show up for the appraisal with the appraiser’s work already done; I would hand him/her the list of comparables.
This way I got a much higher appraisal.

You will need help from a Realtor to do this for you. You should drive all the Comps and really do your homework. If you can prove the higher value you have a much better chance of getting the appraisal you need.


Thanks for the advice- I am licensed to sell real estate in my state so I should be able to put my own comps together. I guess I didn’t realize that they would accept comps from me…Should I get their comp stds (geographic area, recent sale periods, etc) from my LO?

Is there no way to get it done without an appraisal? You can go to the original loan amount without an appraisal. Another suggestion may be to take a slightly higher rate and use some of the yield to finance the closing costs.

Jake I was told the other day by a Mortgage originator that Appraisers are required to includ foreclosures now. I don’t really know if its true and most definately don’t agree. Something new I guess.Herbster

christopher-could you elaborate? I’m just trying to refi into a lower interest rate, not cash out or anything like that, so I should be able to do it without an appraisal?

As long as it is a rate and term refinance, FHA offers a “Streamlined Refinance” option for your scenario.

FHA will let you streamline refinance your loan without an appraisal as long as you don’t go over your original loan amount.From your posting it sounds as if you have paid down your original loan about 4k. You could use that towards your closing costs as well as bring your April payment to closing and you should be able to get this done without an appraisal. I would definitely suggest you find a way to make your scenario work. With rates in the high 4’s now is a great time to refi. Hope this helps.

Yeah, I originally started out doing the Streamline refi and right in the middle of it all my LO said that the secondary market investors didn’t like how the Streamlines were performing so they’re now requiring the Streamlines to pull credit, tax docs, appraisals, the whole nine yards, so I’m not sure if I can do it without the appraisal. Have you heard of this?

What that means is most likely whomever your broker is using is requiring those documents. I am working on several FHA streamlines with no appraisal or income/asset documentation. All that should be required is a 620 FICO, Note, HUD-1 from previous closing, and possibly a deed of trust, along with a VERBAL verification of employment. The Note, HUD-1 and Deed of Trust are just for confirmation of original loan amount, confirmation of no prior cashout, and FHA case number. The FICO is the minimum qualifier and the verbal verification of employment is a no brainer. Other than that if you don’t want to exceed your original loan amount you don’t have to have an appraisal.

Are you taking a co-borrower off of the new loan or adding someone? That may be the trigger for all of the information he is requesting.

Unfortunately not-no coborrowers or anything like that, my broker must have some picky secondary investors. If he can’t get the job done is it worth going through another lender or am I likely to run into the same issues?

I have been speaking with GMAC regarding my FHA loan that I am attemting to do a streamlined refinance on. I can do the rate and term refi with no docs, no credit check, no income or employment verification; and no appraisal as long as the closing costs are brought to the table instead of wrapped in the loan. My issue is in regards to the PMI. I had obtained this loan in August of 2008 and paid @$3,000 in PMI upfront out of closing. The LO said that there is no credit for this amount paid and that I will have to come up with the same amount to bring to closing if I refi. My rate will be 1.5% less, but I don’t agree with their not being any sort of credit for the PMI. Has anyone else dealt with this?