Don't risk your investment with a Property Inspection WaiverIf you are getting a loan for a home, your lender may give you the option to use a Property Inspection Waiver (PIW) on your loan application. The program, begun by Fannie Mae in 2017, allows you to be approved for a mortgage without an appraisal at all. It's a relatively new concept, and some lenders love it. But what motivated the change, and what risks are there for you? 
How do PIWs work?Essentially, deciding how much your house is worth falls into the hands of your lender. They determine the value systematically on a computer, employing a database from Fannie Mae rather than hiring a local appraiser to inspect the home you're about to buy. So, rather than a hands-on evaluation, lenders rely on computer processes to sort through a pile of previously collected information. Get your appraisal from Appraisal Nerd today Get a quote onlineWho can get a Property Inspection Waiver?The program is currently limited, but it's progressively building to include more types of transactions. Your property needs to have entries in Fannie Mae's electronic database, so homes which have never been appraised aren't eligible for a Property Inspection Waiver. Additionally, you need to have an excellent credit score and high assets for approval. Why is a PIW applied?The waiver omits appraisal charges, and it can cut closing time substantially for buyers. On the surface, this simplified process seems like a good deal — but there's a crucial point you'll want to recognize. With a PIW, your lender is NOT liable if the valuation ends up wrong. That's great for lenders, but awful for the home buyer. What could go wrong?The information in Fannie Mae's database is pulled from previous appraisal reports completed by professional appraisers. it might be relatively accurate, but it won't necessarily be a current assessment of the quality of a building that's constantly changing. Without a professional appraisal of your home, recent improvements, remodels, or damages could certainly be neglected by the system. Due to these shortcomings, you can imagine a scenario where your home is valued too high by the program assessing it. If that happens, you could run into snags when it's time to put it back on the market. You might not be able to receive what you paid for it, and you'll have no recourse against your lender when the money starts adding up. What is the bottom line?An accurate, professional appraisal typically costs a few hundred dollars, but it can save you a substantial amount more in the future. With a PIW, there is no guarantee you're getting an honest valuation of a premium asset. Appraisal Nerd can help. Buying or refinancing a home is a big decision with grand consequences. You need to know without a doubt that you're receiving a fair deal, and working with a licensed appraiser is the safest move you can make. Computers and algorithms are in nearly every area of modern life, but when it comes to measuring the value of your home, nothing is more accurate than the careful assessment of a licensed professional you trust. |