Is a Property Inspection Waiver worth the risk?If you are getting a loan for a home, your lender may give you the option to use a Property Inspection Waiver (PIW) on your application. The waiver program, started by Fannie Mae in 2017, allows you to move forward with your mortgage without requiring an appraisal. It's a newer concept, and some lenders love it. But what determined it, and what risks are associated? 
How does a PIW work?Basically, deciding how much 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 instead of hiring a local appraiser to inspect the home you're getting ready to buy. So, rather than a manual evaluation, lenders rely on computer methods to sort through an array of previously collected data. Get your appraisal from Curtis Bay Area Appraisals today Get a quote todayWho's qualified for a Property Inspection Waiver?The program's currently limited, but it's progressively expanding to include more types of transactions. Your home has to have records in Fannie Mae's electronic database, so homes that have never been appraised are not eligible for a Property Inspection Waiver. Additionally, you're required to have an excellent credit score and high assets for approval. Why is it applied?The waiver removes appraisal fees, and it can considerably pare down closing time for buyers. At first glance, this streamlined process sounds like a bargain — but there's a vital point you will want to recognize. With a PIW, your lender is NOT liable if the assessment turns out to be wrong. That's a bonus for lenders, but presents no protection to the buyer whatsoever. What could happen if I agree to a Property Inspection Waiver?The information in Fannie Mae's database is pulled from past appraisals done by professional appraisers. This data might be accurate to some extent, but by definition, it will not be an up-to-date evaluation of the exterior and interior quality in a building that's constantly changing. Without a professional appraisal of your home, new improvements and/or damages can absolutely be omitted by the system. Because of these shortcomings, you can imagine a scenario where your home is valued too high by the system evaluating it. If that happens, you could run into issues when it's time to put it back on the market. You could wind up settling for far less than you paid, and you'll have no recourse against your lender when the money starts adding up. What is the bottom line?An accurate appraisal usually costs a few hundred dollars, but it could save you a great deal more in the future. With a PIW, there is no guarantee you're receiving an honest valuation of a premium asset. Curtis Bay Area Appraisals can help. Buying or refinancing a property is a big decision with big consequences. You want to know with certainty that you're receiving 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 property, nothing is more accurate than the careful examination of a licensed professional you trust. |