Don't risk your investment with a Property Inspection WaiverIf you're 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 PIW program, started by Fannie Mae in 2017, allows you to be approved for a mortgage without needing an appraisal at all. It's a relatively new concept, and some lenders love it. But what determined the change, and what are the risks for you as a home buyer? 
How does a Property Inspection Waiver work?Basically, determining how much your house is worth falls into the hands of your lender. They determine its value automatically on a computer, using an online database from Fannie Mae rather than hiring a local appraiser to inspect the property you're about to buy. So, rather than a hands-on evaluation, lenders rely solely on computer methods to sort through a bank of previously collected information. Get your appraisal from Lemmon Appraisal Services today Get a quote onlineWho's eligible for a Property Inspection Waiver?The program is limited currently, but it is including more transaction types continuously. Your property needs to have entries in Fannie Mae's electronic database, so homes that have never been appraised are not eligible for a Property Inspection Waiver. What's more, you need to have an excellent credit score and high assets to be approved. Why do lenders use Property Inspection Waivers?The waiver omits appraisal expenses, and it can reduce closing time substantially for buyers. On the surface, this process sounds like a bargain — but there's a key point you will want to recognize. With a PIW, your lender is NOT held liable if the valuation winds up being wrong. That's a benefit to lenders, but affords no protection to the home buyer. What could go wrong if I accept a Property Inspection Waiver?The information in Fannie Mae's database is derived from past appraisal reports completed by professional appraisers. This data might be somewhat accurate, but by definition, it will not be an up-to-date evaluation of the quality of a building that changes from year to year. Without a professional appraisal of your home, recent improvements and/or damages could easily be missed by the system. Because of these shortcomings, it's easy to imagine a scenario where your home is valued too high by the system evaluating it. If that happens, you could run into snags when it's time to sell. You could end up getting less than you paid, and you'll have no recourse against your lender when the money falls short. What's the bottom line?An accurate, professional appraisal usually costs a few hundred dollars, but it can save you thousands (or tens of thousands) in the future. With a Property Inspection Waiver, there's absolutely no guarantee that you're receiving an honest valuation of your most expensive asset. Lemmon Appraisal Services can help. Buying or refinancing a house is a big decision with big consequences. You need to know without a doubt that you're getting a fair deal, and working with a licensed appraiser is the safest action you can take. 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 examination of a licensed professional you trust. |