Don't risk your investment with a Property Inspection WaiverIf you are 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, started by Fannie Mae in 2017, allows you to be approved for a mortgage without needing an appraisal at all. It's a relatively new concept, and some lenders love it. But what drove it, and what are the risks for you as a home buyer? 
How does a Property Inspection Waiver work?Essentially, the value of your home is established by your lender. They determine the value automatically on a computer, using a database from Fannie Mae rather than hiring a local appraiser to inspect the home you're about to buy. So, rather than a firsthand evaluation, lenders rely entirely on computer algorithms to sort through a pile of previously collected information. Get your appraisal from Massey Appraisals today Get a quote todayWho's eligible for a Property Inspection Waiver?The program is currently limited, but it is building continually to include more types of transactions. Your property needs to have entries in Fannie Mae's electronic database, so homes which have never been appraised aren't eligible for a PIW. What's more, you must have an excellent credit score and high assets for approval. Why do lenders use PIWs?The waiver omits appraisal fees, and it can considerably pare down closing time for buyers. At first glance, this streamlined process seems like a bargain — but there's a key point you will want to consider. With a PIW, your lender is NOT held responsible if the valuation turns out to be wrong. That's great for lenders, but affords zero protection to the buyer whatsoever. Is there anything that could go wrong?The information in Fannie Mae's database is derived from past appraisal reports done by professional appraisers. it might be accurate to a degree, but it won't necessarily be an up-to-date evaluation of the exterior and interior quality in a building that changes over time. Without a professional valuation of your home, recent improvements and/or damages could absolutely be overlooked by the system. Because of these shortcomings, it's easy to imagine an instance where your property is priced too high by the computer program assessing it. If that happens, you could run into issues when it's time to put it back on the market. You could wind up getting less than you paid, and you'll have no recourse against your lender when the money falls short. What is the bottom line?A definitive appraisal usually costs a few hundred dollars, but it can save you a substantial amount more in the future. With a Property Inspection Waiver, there's no guarantee you're receiving an honest valuation of a premium asset. Massey Appraisals can help. Buying or refinancing a home is a big decision with grand consequences. You want to know without a doubt that you're getting a fair deal, and working with a licensed appraiser is the safest 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. |