Don't risk your home with a Property Inspection WaiverIf 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 loan application. The waiver program, started 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 prompted it, and what are the associated risks? 
How do Property Inspection Waivers work?Essentially, your lender decides what your house is worth. They determine the value systematically on a computer, using a database from Fannie Mae in lieu of hiring a local appraiser to inspect the property you're about to buy. So, rather than a hands-on evaluation, lenders rely on computer processes to sift through a pile of previously collected information. Get your appraisal from Mountain Home Properties today Get a quote onlineWho's qualified for a PIW?The program's limited currently, but it is expanding continually to include more types of transactions. Your home has to have entries in Fannie Mae's electronic database, so homes which have never been appraised are not eligible for a Property Inspection Waiver. Additionally, you must have an excellent credit score and high assets to be approved. Why do lenders use it?The waiver removes appraisal expenses, and it can trim closing time considerably for buyers. On the surface, this streamlined process seems like a bargain — but there's an essential point you'll want to consider. With a PIW, your lender is NOT liable if the valuation turns out to be wrong. That's an added bonus for lenders, but offers no protection to the home buyer. Could anything go wrong?The information in Fannie Mae's database is pulled from past appraisals completed by professional appraisers. This data might be accurate to some extent, but by definition, it won't be a current evaluation of the quality of a building that changes from year to year. Without a professional appraisal of your home, recent improvements and/or damages could certainly be overlooked by the system. Because of these shortcomings, you can imagine an instance where your property is priced too high by the system assessing it. If that happens, you could run into problems 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 can save you thousands (or tens of thousands) in the future. With a Property Inspection Waiver, there's absolutely no guarantee that you're receiving an honest valuation of your most expensive asset. Mountain Home Properties can help. Buying or refinancing a property is a big decision with grand consequences. You demand to know with certainty that you're receiving a fair deal, and working with a licensed appraiser is the smartest move you can make. Computers and algorithms are in nearly 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. |