Property Inspection Waivers: Are they worth the risk?If you're getting a loan for a home, your lender might give you the option to use a Property Inspection Waiver (PIW) on your loan application. The waiver program, introduced by Fannie Mae in 2017, allows you to move forward with your mortgage without an appraisal at all. It's a newer concept, and some lenders love it. But what determined the change, and what risks are associated? 
How do PIWs work?Essentially, the value of your home is determined by your lender. They determine the value automatically on a computer, employing a database from Fannie Mae instead of hiring a local appraiser to personally inspect the property you're about to buy. So, rather than a hands-on evaluation, lenders rely on computer algorithms to sort through a trove of previously collected information. Get your appraisal from Floyd Appraisal Works today Get a quote onlineWho can get a PIW?The program's currently limited, but it's including more transaction types continuously. Your home has to have records in Fannie Mae's electronic database, so homes that have never been appraised are not eligible for a PIW. Additionally, you're required to have an excellent credit score and high assets for approval. Why is a Property Inspection Waiver used?The waiver eliminates appraisal expenses, and it can considerably shorten closing time for buyers. On the surface, this simplified process sounds like a good deal — but there's a bottom line you'll want to keep in mind. With a PIW, your lender is NOT held liable if the assessment is wrong. That's a benefit to lenders, but terrible for the home buyer. Is there anything that could go wrong?The information in Fannie Mae's database is derived from past appraisal reports done by professional appraisers. it might be accurate to a degree, but by definition, it will not be an up-to-date evaluation of the quality of a building that changes over time. Without a professional valuation of your home, new improvements, remodels, or damages could absolutely be missed by the system. Due to these shortcomings, you can imagine an instance where your home is priced too high by the system evaluating it. If that happens, you could run into snags when it's time to list it for sale. You might not be able to get what you paid for it, and you'll have no recourse against your lender when the money falls short. What's the bottom line?A definitive appraisal typically costs a few hundred dollars, but it could save you a substantial amount more in the future. With a Property Inspection Waiver, there is clearly no guarantee you're getting an honest valuation of your most expensive asset. Floyd Appraisal Works can help. Buying or refinancing a house is a big decision with grand consequences. You want to know without a doubt that you're getting a fair deal, and working with a licensed appraiser is the safest action you can take. 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. |