Don't risk your home with a Property Inspection WaiverIf you are buying or refinancing a home, your lender might give you the option to use a Property Inspection Waiver (PIW) on your loan application. The program, initiated by Fannie Mae in 2017, allows you to be approved for a mortgage without an appraisal at all. It's a newer concept, and some lenders love it. But what caused the change, and what risks are associated? 
How do PIWs work?Basically, your lender decides what your house is worth. 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 property you're about to buy. So, rather than a firsthand evaluation, lenders rely solely on computer methods to sift through a bank of previously collected information. Get your appraisal from H.M. Hoffman & Company today Get a quote nowWho is qualified for a Property Inspection Waiver?The program is limited right now, but it's building continually to include more transaction types. Your home needs to have records in Fannie Mae's electronic database, so homes that have never been appraised aren't eligible for a PIW. Additionally, you need to have an excellent credit score and high assets for approval. Why do lenders use PIWs?The waiver cancels out appraisal charges, and it can shorten closing time considerably for buyers. Outwardly, this simplified process sounds like a bargain — but there's an essential point you'll want to recognize. With a PIW, your lender is NOT held liable if the assessment is wrong. That's great for lenders, but affords zero protection to the buyer. What could go wrong?The information in Fannie Mae's database is derived from past 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 changes from year by year. Without a professional valuation of your home, new improvements and/or damages can absolutely be missed by the system. Because of these deficiencies, you can imagine a scenario where your property is priced too high by the system evaluating it. If that happens, you could run into snags when it's time to put it back on the market. You may not be able to receive what you paid for it, and you'll have no recourse against your lender when the money falls short. What's the bottom line?An accurate appraisal typically costs a few hundred dollars, but it can save you thousands in the long run. With a Property Inspection Waiver, there's no guarantee you're getting an honest valuation of your most expensive asset. H.M. Hoffman & Company 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 way to go. Computers and algorithms have assumed a place in nearly 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. |