Is a Property Inspection Waiver worth the risk?If you're buying or refinancing a home, your lender may give you the option to use a Property Inspection Waiver (PIW) on your application. The PIW program, started by Fannie Mae in 2017, allows you to move forward with your mortgage without an appraisal. It's a newer concept, and some lenders love it. But what prompted it, and what risks are associated? 
How do Property Inspection Waivers work?Basically, your lender establishes what your house is worth. They determine the value systematically on a computer, using a database from Fannie Mae instead 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 methods to sift through a trove of previously collected data. Get your appraisal from Clearfork Appraisals today Get a quote todayWho is eligible for a Property Inspection Waiver?The program is limited currently, but it is being built regularly to include more types of transactions. Your property has to have records in Fannie Mae's electronic database, so homes which have never been appraised aren't eligible for a Property Inspection Waiver. What's more, you must have an excellent credit score and high assets for approval. Why is it applied?The waiver removes appraisal fees, and it can reduce closing time substantially for buyers. On the surface, this process sounds like a good deal — 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 winds up being wrong. That's an added bonus for lenders, but a disadvantage to the home buyer. What could go wrong?The information in Fannie Mae's database is pulled from previous appraisal reports done by professional appraisers. it might be relatively accurate, but by definition, it will not be a current assessment of the quality of a building that's regularly changing. Without a professional appraisal of your home, recent improvements, renovations, or damages can easily be omitted by the system. Because of these shortcomings, it's easy to imagine a scenario where your property is valued too high by the system evaluating it. If that happens, you could run into issues when it's time to list it for sale. 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, professional appraisal usually costs a few hundred dollars, but it can save you a substantial amount more in the future. With a PIW, there is simply no guarantee that you're getting an honest valuation of your most expensive asset. Clearfork Appraisals can help. Buying or refinancing a house is a big decision with grand consequences. You demand to know without a doubt that you're getting a fair deal, and working with a licensed appraiser is the safest move you can make. Computers and algorithms have assumed a place 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. |