Does VA refinance require appraisal?

For VA refinance loans, whether an appraisal is required depends on the specific type of refinance you are pursuing.

When a VA Appraisal is Required

VA Cash-Out Refinance loans explicitly require an appraisal. This type of refinance allows you to convert a portion of your home equity into cash.

• Purpose of Appraisal: An appraisal is essential for Cash-Out refinances because the amount of cash you can receive is directly tied to your home's equity. The appraisal establishes your home's current market value, which is crucial for determining how much equity you have available.
• Underwriting Process: These loans undergo a comprehensive underwriting process, similar to that applied to VA purchase loans. This includes a thorough evaluation of your financial standing and the property's value.
• Credit Check: In addition to an appraisal, a credit check is also a requirement for all Cash-Out refinance loans.

When a VA Appraisal is Typically Not Required

VA Interest Rate Reduction Refinance Loans (IRRRLs), often called VA Streamline Refinances, generally do not require an appraisal.

• Purpose of IRRRL: The primary goal of an IRRRL is to help you reduce your interest rate or convert an adjustable-rate mortgage (ARM) to a fixed-rate mortgage.
• Streamlined Process: Because IRRRLs are designed to be a simpler, more streamlined process to benefit existing VA loan holders, they often do not necessitate a new appraisal or extensive credit underwriting, though lenders may still have their own requirements.

Summary of Appraisal Requirements

To clarify the appraisal requirements for different VA refinance options:

Understanding these distinctions is key to knowing what to expect when pursuing a VA refinance.