Is a Property Inspection Waiver worth the risk?If you're buying or refinancing a home, your lender might 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. It's a newer concept, and some lenders love it. But what caused it, and what are the associated risks? 
How does a Property Inspection Waiver work?Essentially, your lender determines what your house is worth. They determine its value systematically on a computer, using a database from Fannie Mae in lieu of hiring a local appraiser to inspect the property you're about to buy. So, rather than a hands-on evaluation, lenders rely entirely on computer algorithms to sift through a trove of previously collected information. Get your appraisal from Walz Appraisal today Get a quote onlineWho's qualified for a Property Inspection Waiver?The program is currently limited, but it's progressively expanding to include more transaction types. Your property has to have records in Fannie Mae's electronic database, so homes which have never been appraised are not eligible for a PIW. What's more, you're required to have an excellent credit score and high assets to be approved. Why do lenders use Property Inspection Waivers?The waiver eliminates appraisal expenses, and it can cut closing time substantially for buyers. Outwardly, this process sounds like a bargain — but there's a bottom line you will want to recognize. With a PIW, your lender is NOT held responsible if the assessment ends up wrong. That's great for lenders, but affords zero protection to the buyer. Is there anything that could go wrong?The information in Fannie Mae's database is derived from previous appraisals done by professional appraisers. it might be accurate to a degree, but by definition, it will not be a current evaluation of the quality of a building that changes over time. Without a professional valuation of your home, new improvements and/or damages could certainly be overlooked by the system. Due to these shortcomings, you can imagine an instance where your property is priced too high by the program evaluating it. If that happens, you could run into issues when it's time to put it back on the market. You may not be able to receive what you paid for it, and you'll have no recourse against your lender when the money falls short. What's the bottom line?A definitive appraisal typically costs a few hundred dollars, but it could save you a lot more in the long run. With a Property Inspection Waiver, there is clearly no guarantee you're receiving an honest valuation of your most expensive asset. Walz Appraisal can help. Buying or refinancing a house is a big decision with big consequences. You should know with certainty that you're getting a fair deal, and working with a licensed appraiser is the smartest 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. |