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 – or PIW – on your application. The waiver program, begun by Fannie Mae in 2017, allows you to be approved for a mortgage without an appraisal at all. It's a relatively new concept, and some lenders love it. But what drove it, and what are the associated risks? 
How do PIWs work?Basically, your lender determines what your property is worth. They determine the value systematically on a computer, employing an online database from Fannie Mae instead of hiring a local appraiser to inspect the home you're about to buy. So, rather than a manual evaluation, lenders rely solely on computer algorithms to sift through an array of previously collected information. Get your appraisal from Caleb Hollis Appraisals Inc. today Get a quote onlineWho can get a Property Inspection Waiver?The program's currently limited, but it is expanding 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 are not eligible for a Property Inspection Waiver. What's more, you're required to have an excellent credit score and high assets to be approved. Why do lenders use it?The waiver omits appraisal charges, and it can considerably shorten closing time for buyers. At first glance, this streamlined process sounds like a bargain — but there's a bottom line you will want to consider. With a PIW, your lender is NOT held liable if the valuation winds up being wrong. That's an added bonus for lenders, but presents zero protection to the home buyer whatsoever. What could happen if I accept a PIW?The information in Fannie Mae's database is pulled from previous appraisals done by professional appraisers. This data might be accurate to a degree, but it won't necessarily be a current evaluation of the quality of a building that's constantly changing. Without a professional valuation of your home, new improvements, renovations, or damages could absolutely be left out by the system. Because of these deficiencies, you can imagine a scenario where your property is priced too high by the program 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 starts adding up. What's the bottom line?An accurate appraisal typically costs a few hundred dollars, but it can save you thousands (or tens of thousands) in the long run. With a PIW, there is simply no guarantee that you're receiving an honest valuation of your most expensive asset. Caleb Hollis Appraisals Inc. can help. Buying or refinancing a property is a big decision with grand consequences. You need to know without a doubt that you're receiving a fair deal, and working with a licensed appraiser is the smartest 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. |