Are Property Inspection Waivers 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 application. The PIW program, initiated by Fannie Mae in 2017, allows you to be approved for a mortgage without an appraisal. It's a newer concept, and some lenders love it. But what prompted it, and what risks are there for you as a home buyer? 
How do Property Inspection Waivers work?Basically, your lender decides what your property is worth. They determine the value automatically on a computer, employing a database from Fannie Mae instead of hiring a local appraiser to personally inspect the property you're about to buy. So, rather than a hands-on evaluation, lenders rely on computer methods to sift through a trove of previously collected data. Get your appraisal from Robert Michael Lambert today Get a quote nowWho can get a PIW?The program's limited right now, but it's including more types of transactions regularly. Your property needs to have entries in Fannie Mae's electronic database, so homes which have never been appraised are not eligible for a PIW. What's more, you need to have an excellent credit score and high assets to be approved. Why is it used?The waiver cancels out appraisal expenses, and it can reduce closing time substantially for buyers. At first glance, this simplified process seems like a bargain — but there's a key point you'll want to recognize. With a PIW, your lender is NOT liable if the valuation turns out to be wrong. That's an added bonus for lenders, but terrible for the buyer. What could go wrong if I accept a PIW?The information in Fannie Mae's database is derived from past appraisal reports done 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 changes over time. Without a professional valuation of your home, new improvements and/or damages could absolutely be omitted by the system. Due to these shortcomings, you can imagine an instance where your property is valued too high by the system assessing it. If that happens, you could run into issues when it's time to sell. You could end up settling for less than you paid, and you'll have no recourse against your lender when the money falls short. What's the bottom line?An accurate appraisal typically costs a few hundred dollars, but it can save you a substantial amount more in the future. With a PIW, there is simply no guarantee you're receiving an honest valuation of a premium asset. Robert Michael Lambert can help. Buying or refinancing a house is a big decision with big consequences. You want to know without a doubt that you're receiving 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 home, nothing is more accurate than the careful examination of a licensed professional you trust. |