Property Inspection Waivers: Are they really worth the risk?If you're getting a loan for a home, your lender might give you the option to use a Property Inspection Waiver (PIW) on your loan application. The waiver program, initiated by Fannie Mae in 2017, allows you to be approved for a mortgage without requiring an appraisal. It's a newer concept, and some lenders love it. But what determined it, and what risks are there for you? 
How do PIWs work?Essentially, deciding what your house is worth falls into the hands of your lender. They determine its value automatically on a computer, employing a database from Fannie Mae rather than hiring a local appraiser to personally inspect the home you're getting ready to buy. So, rather than a firsthand evaluation, lenders rely on computer methods to sift through a pile of previously collected data. Get your appraisal from Alpha Appraisal Associates today Get a quote nowWho's eligible for a PIW?The program's currently limited, but it's building continually to include more transaction types. Your property needs to have records in Fannie Mae's electronic database, so homes that 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 do lenders use it?The waiver removes appraisal fees, and it can cut closing time substantially for buyers. Outwardly, this simplified process sounds like a bargain — but there's a bottom line you will want to recognize. With a PIW, your lender is NOT liable if the assessment winds up being wrong. That's great for lenders, but affords zero protection to the home buyer. What could go wrong if I accept a PIW?The information in Fannie Mae's database is pulled from previous appraisal reports done by professional appraisers. it might be somewhat accurate, but by definition, it won't be a current evaluation of the quality of a building that changes over time. Without a professional valuation of your home, new improvements, renovations, or damages could easily be left out by the system. Due to these shortcomings, you can imagine a scenario where your property is priced too high by the program assessing it. If that happens, you could run into snags when it's time to sell. You could wind up getting less than you paid, and you'll have no recourse against your lender when the money falls short. What is the bottom line?An accurate appraisal typically costs a few hundred dollars, but it can save you thousands (or tens of thousands) in the future. With a Property Inspection Waiver, there is simply no guarantee you're getting an honest valuation of a premium asset. Alpha Appraisal Associates can help. Buying or refinancing a property is a big decision with grand consequences. You should know with certainty that you're getting a fair deal, and working with a licensed appraiser is the safest action you can take. Computers and algorithms have assumed a place in almost 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. |