Property Inspection Waivers: Are they really worth the risk?If you are buying or refinancing a home, your lender might give you the option to use a Property Inspection Waiver – or PIW – on your loan application. The PIW program, begun 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 it, and what are the associated risks? 
How do PIWs work?Basically, determining how much your property is worth falls into the hands of your lender. They determine its value systematically on a computer, employing an online database from Fannie Mae rather than hiring a local appraiser to inspect the property you're about to buy. So, rather than a hands-on evaluation, lenders rely on computer methods to sort through a pile of previously collected information. Get your appraisal from Absolute Appraisal Inc. today Get a quote onlineWho is qualified for a Property Inspection Waiver?The program is currently limited, but it's being expanded continually to include more transaction types. Your property has to have records in Fannie Mae's electronic database, so homes which have never been appraised aren't eligible for a Property Inspection Waiver. What's more, you need to have an excellent credit score and high assets for approval. Why do lenders use it?The waiver eliminates appraisal charges, and it can trim closing time considerably for buyers. At first glance, this simplified process sounds like a good deal — but there's a bottom line you'll want to consider. With a PIW, your lender is NOT liable if the assessment winds up being wrong. That's great for lenders, but a disadvantage to the home buyer. What could go wrong?The information in Fannie Mae's database is pulled from previous appraisal reports completed by professional appraisers. it might be somewhat accurate, but it won't necessarily be an up-to-date assessment 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 could certainly be neglected by the system. Because of these shortcomings, it's easy to imagine a situation where your property is valued 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 settling for less than you paid, and you'll have no recourse against your lender when the money falls short. What is the bottom line?An accurate, professional appraisal typically costs a few hundred dollars, but it could save you a great deal more in the long run. With a Property Inspection Waiver, there's no guarantee you're getting an honest valuation of your most expensive asset. Absolute Appraisal Inc. 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 smartest 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 property, nothing is more accurate than the careful examination of a licensed professional you trust. |