Are Property Inspection Waivers worth the risk?If you are buying or refinancing a home, your lender may give you the option to use a Property Inspection Waiver (PIW) on your loan application. The program, started 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 are the associated risks? 
How do Property Inspection Waivers work?Basically, deciding how much your home is worth falls into the hands of your lender. They determine its value systematically on a computer, using a database from Fannie Mae instead of hiring a local appraiser to inspect the property you're about to buy. So, rather than a manual evaluation, lenders rely on computer processes to sort through a bank of previously collected information. Get your appraisal from Lemmon Appraisal Services today Get a quote onlineWho can receive a Property Inspection Waiver?The program is currently limited, but it is including more types of transactions regularly. Your home has to have records in Fannie Mae's electronic database, so homes that have never been appraised aren't eligible for a PIW. What's more, you're required to have an excellent credit score and high assets for approval. Why is a Property Inspection Waiver applied?The waiver cancels out appraisal expenses, and it can trim closing time considerably for buyers. Outwardly, this simplified process sounds like a bargain — but there's an essential point you'll want to keep in mind. With a PIW, your lender is NOT held liable if the valuation ends up wrong. That's great for lenders, but offers zero protection to the home buyer whatsoever. Is there anything that could go wrong?The information in Fannie Mae's database is pulled from past appraisals done by professional appraisers. This data might be accurate to a degree, but it won't necessarily be an up-to-date evaluation of the exterior and interior quality in a building that's constantly changing. Without a professional valuation of your home, recent improvements, renovations, or damages can easily be left out by the system. Due to these deficiencies, it's easy to imagine an instance where your property is valued too high by the system assessing it. If that happens, you could run into issues when it's time to put it back on the market. You could end up settling for less than you paid, and you'll have no recourse against your lender when the money starts adding up. What is the bottom line?A definitive appraisal usually costs a few hundred dollars, but it can save you a substantial amount more in the future. With a PIW, there is absolutely no guarantee that you're receiving an honest valuation of your most expensive asset. Lemmon Appraisal Services can help. Buying or refinancing a home is a big decision with grand consequences. You need to know with certainty that you're receiving a fair deal, and working with a licensed appraiser is the safest way to go. Computers and algorithms are in nearly every area of modern life, but when it comes to measuring the value of your property, nothing is more accurate than the careful examination of a licensed professional you trust. |