Property Inspection Waivers: Are they really worth the risk?If you're buying or refinancing a home, your lender might give you the option to use a Property Inspection Waiver (PIW) on your application. The PIW program, begun by Fannie Mae in 2017, allows you to be approved for a mortgage without an appraisal. It's a newer concept, and some lenders love it. But what motivated the change, and what are the associated risks? 
How does a Property Inspection Waiver work?Essentially, determining how much your home is worth falls into the hands of 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 home you're about to buy. So, rather than a firsthand evaluation, lenders rely entirely on computer methods to sift through a pile of previously collected information. Get your appraisal from Crescent Appraisal Group, Inc. today Get a quote todayWho's eligible for a Property Inspection Waiver?The program's currently limited, but it's including more types of transactions 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 need to have an excellent credit score and high assets to be approved. Why is a PIW applied?The waiver cancels out appraisal charges, and it can cut closing time considerably for buyers. Outwardly, this streamlined process sounds like a good deal — but there's a vital point you will want to consider. With a PIW, your lender is NOT held liable if the valuation is wrong. That's an added bonus for lenders, but awful for the buyer. What could go wrong if I accept a PIW?The information in Fannie Mae's database is derived from previous appraisals done by professional appraisers. it might be accurate to a degree, but it won't necessarily be a current assessment of the exterior and interior quality in a building that's constantly changing. Without a professional appraisal of your home, new improvements, remodels, or damages can easily be omitted by the system. Because of these shortcomings, it's easy to imagine a situation where your home is priced too high by the computer program evaluating it. If that happens, you could run into problems when it's time to list it for sale. You could wind up getting 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 typically costs a few hundred dollars, but it could save you a lot more in the future. With a PIW, there is no guarantee you're getting an honest valuation of a premium asset. Crescent Appraisal Group, Inc. can help. Buying or refinancing a property is a big decision with big consequences. You demand to know with certainty that you're getting a fair deal, and working with a licensed appraiser is the safest action you can take. 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 accurate than the careful assessment of a licensed professional you trust. |