Is a Property Inspection Waiver worth the risk?If you're 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, initiated by Fannie Mae in 2017, allows you to be approved for a mortgage without needing an appraisal. It's a relatively new concept, and some lenders love it. But what drove it, and what are the associated risks? 
How does a PIW work?Essentially, what your home is worth is determined by your lender. They determine the value automatically on a computer, using a database from Fannie Mae in lieu of hiring a local appraiser to personally inspect the home you're about to buy. So, rather than a hands-on evaluation, lenders rely on computer processes to sort through a trove of previously collected information. Get your appraisal from Tuttle Residential Appraisal today Get a quote onlineWho can get a PIW?The program's currently limited, but it's being built continually to include more types of transactions. Your home needs to have records in Fannie Mae's electronic database, so homes which have never been appraised are not eligible for a Property Inspection Waiver. Additionally, you must have an excellent credit score and high assets for approval. Why do lenders use PIWs?The waiver eliminates appraisal fees, and it can cut closing time substantially for buyers. At first glance, this simplified process seems like a good deal — but there's a key point you will want to keep in mind. With a PIW, your lender is NOT liable if the assessment winds up being wrong. That's a benefit to lenders, but awful for the home buyer. What could go wrong?The information in Fannie Mae's database is derived from previous appraisals done by professional appraisers. it might be somewhat accurate, but it won't necessarily be a current evaluation of the quality of a building that's regularly changing. Without a professional valuation of your home, recent improvements and/or damages could certainly be neglected by the system. Due to these deficiencies, it's easy to imagine an instance 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 wind up settling for 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 usually costs a few hundred dollars, but it can save you thousands in the future. With a PIW, there is clearly no guarantee that you're getting an honest valuation of a premium asset. Tuttle Residential Appraisal can help. Buying or refinancing a property is a big decision with grand consequences. You want to know without a doubt that you're receiving a fair deal, and working with a licensed appraiser is the smartest move you can make. Computers and algorithms are in almost every area of modern life, but when it comes to measuring the value of your home, nothing is more precise than the careful assessment of a licensed professional you trust. |