Is a Property Inspection Waiver 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 loan application. The program, started by Fannie Mae in 2017, allows you to move forward with your mortgage without getting an appraisal at all. It's a newer concept, and some lenders love it. But what drove the change, and what are the risks for you as a home buyer? 
How do Property Inspection Waivers work?Basically, determining what your property is worth falls into the hands of your lender. They determine the value automatically on a computer, employing 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 solely on computer methods to sort through a bank of previously collected data. Get your appraisal from Trident Appraisal Services, LLC today Get a quote todayWho's eligible for a Property Inspection Waiver?The program is currently limited, but it's including more types of transactions regularly. 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 must have an excellent credit score and high assets for approval. Why is it used?The waiver cancels out appraisal fees, and it can shorten closing time considerably for buyers. Outwardly, this simplified process sounds like a good deal — but there's a vital point you'll want to keep in mind. With a PIW, your lender is NOT liable if the valuation is wrong. That's great for lenders, but presents no protection to the buyer whatsoever. What could go wrong if I accept a Property Inspection Waiver?The information in Fannie Mae's database is pulled from previous appraisal reports completed by professional appraisers. it might be relatively accurate, but it won't necessarily be an up-to-date evaluation of the exterior and interior quality in a building that's regularly changing. Without a professional valuation of your home, recent improvements and/or damages can absolutely be neglected by the system. Because of these shortcomings, you can imagine an instance where your property is priced too high by the program evaluating it. If that happens, you could run into issues when it's time to put it back on the market. You could end up getting less than you paid, and you'll have no recourse against your lender when the money falls short. What's the bottom line?A definitive appraisal usually costs a few hundred dollars, but it could save you a lot more in the future. With a PIW, there's simply no guarantee you're getting an honest valuation of your most expensive asset. Trident Appraisal Services, LLC can help. Buying or refinancing a property is a big decision with big consequences. You should know without a doubt that you're getting a fair deal, and working with a licensed appraiser is the smartest 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 examination of a licensed professional you trust. |