VA Streamline Refinance: Is An Appraisal Required? Maybe.

For many years, the VA streamline refinance (aka the VA IRRRL program) did not require an appraisal in order for a Veteran to refinance their VA loan and get a lower interest rate.

But that may be changing.

It is not uncommon now for some lenders who lend money on these loans to require some form of an appraisal. It can be a full blown appraisal, it can be a drive-by appraisal — but the point is that many are now requiring it where before they did not. And FHA/VA has not changed their criteria for what they will insure — an appraisal is currently not required in order for a VA streamline to be insured.

As an example, an announcement by Wells Fargo to all correspondent lenders said:

“in an effort to mitigate the risk of declining home values on VA IRRRL transactions on May 18th will require the seller to obtain and deliver a conventional appraisal to Wells Fargo. Please Note: VA has indicated this appraisal should not be submitted to the VA with the guaranty package.”

Does this really make any sense?

Not really.

But it isn’t the first time that things haven’t made sense in the mortgage market recently.

If you are in the market for a VA streamline and your loan officer is telling you that an appraisal is now required, be sure to ask him if he has access to any other VA lenders – many lenders are still not requiring VA streamlines to have an appraisal.

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