Property Inspection Waivers: Are they really worth the risk?If you're buying or refinancing a home, your lender may give you the option to use a Property Inspection Waiver – or PIW – on your loan application. The waiver program, introduced by Fannie Mae in 2017, allows you to be approved for a mortgage without requiring an appraisal at all. It's a relatively new concept, and some lenders love it. But what motivated it, and what risks are associated? 
How does a Property Inspection Waiver work?Essentially, what your home is worth is determined by your lender. They determine its value systematically on a computer, using a database from Fannie Mae in lieu of hiring a local appraiser to personally inspect the property you're about to buy. So, rather than a hands-on evaluation, lenders rely entirely on computer algorithms to sort through a trove of previously collected information. Get your appraisal from H.M. Hoffman & Company today Get a quote todayWho can receive a Property Inspection Waiver?The program is currently limited, but it's building continually 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 aren't eligible for a Property Inspection Waiver. Additionally, you're required to have an excellent credit score and high assets to be approved. Why is a Property Inspection Waiver applied?The waiver cancels out appraisal charges, and it can cut closing time considerably for buyers. Outwardly, this simplified process sounds like a bargain — but there's a bottom line you will want to consider. With a PIW, your lender is NOT liable if the assessment ends up wrong. That's great for lenders, but terrible for the buyer. Could anything go wrong?The information in Fannie Mae's database is pulled from past appraisal reports done by professional appraisers. it might be accurate to a degree, but it won't necessarily be an up-to-date evaluation of the quality of a building that changes from year to year. Without a professional appraisal of your home, new improvements, remodels, or damages could certainly be missed by the system. Due to these deficiencies, you can imagine a situation where your home is priced too high by the system assessing it. If that happens, you could run into problems when it's time to list it for sale. 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?A definitive appraisal usually costs a few hundred dollars, but it can save you a great deal more in the long run. With a Property Inspection Waiver, there's simply no guarantee you're receiving an honest valuation of a premium asset. H.M. Hoffman & Company can help. Buying or refinancing a house is a big decision with big consequences. You need to know with certainty that you're receiving a fair deal, and working with a licensed appraiser is the safest way to go. 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 accurate than the careful examination of a licensed professional you trust. |