People refinance a home loan for a variety of reasons. You can revise a mortgage to take advantage of a lower interest rate or to lower your monthly payments by stretching the loan out over more years. You can refinance to take money out from the equity you've built up over the years, to make home improvements or buy other things. Refinancing is similar to taking out an original mortgage. You apply to a lender, negotiate terms and go through a closing process. Refinancing can require less paperwork, however, and might not include another appraisal of your house.
Talk to your current lender about refinancing. If you have a conventional loan, not one insured by the Federal Housing Administration or another government program, you might be able to refinance with a minimum of paperwork and no appraisal, if your payments are current, your loan balance is well below the last appraisal and you can demonstrate from tax appraisals or similar records that the value has not decreased.
See if you qualify for "streamlined" FHA refinancing. This is a program introduced in 2009 to help homeowners get new financing with less paperwork. This includes skipping reappraisal in many circumstances. The house must be your primary residence and you must have an existing FHA mortgage, which must be current with no late payments within the past year.
FHA refinancing will not require an appraisal if you are reducing interest rates or lengthening the term of the loan, as long as the loan is less than 96 percent of the stated house value on the existing loan and you are paying all closing costs at the time of settlement. You will have to verify employment and certify that you can afford to pay the closing costs.
You will need an appraisal for FHA refinancing if you want to take cash out or if you want to finance closing costs by wrapping them into the new loan. You can take cash out by changing your loan ratio; if your house is worth $200,000 and your current loan is paid down to $100,000, you can take $25,000 out by increasing the new loan to $125,000, for instance. You can increase the amount of the new loan to cover the closing costs, which may be several thousand dollars.
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