Is a Property Inspection Waiver worth the risk?If you are getting a loan for a home, your lender may give you the option to use a Property Inspection Waiver – or PIW – on your application. The waiver program, introduced by Fannie Mae in 2017, allows you to be approved for a mortgage without getting an appraisal. It's a relatively new concept, and some lenders love it. But what motivated it, and what are the risks for you as a home buyer? 
How does a PIW work?Essentially, what your home is worth is determined by your lender. They determine the value automatically on a computer, using a database from Fannie Mae in lieu of hiring a local appraiser to inspect the home you're getting ready to buy. So, rather than a manual evaluation, lenders rely solely on computer algorithms to sift through a trove of previously collected data. Get your appraisal from Bogris Appraisal LLC today Get a quote todayWho's qualified for a Property Inspection Waiver?The program is limited right now, but it's progressively building to include more transaction types. Your home has to have entries in Fannie Mae's electronic database, so homes that have never been appraised are not eligible for a PIW. What's more, you must have an excellent credit score and high assets to be approved. Why do lenders use Property Inspection Waivers?The waiver omits appraisal expenses, and it can substantially pare down closing time for buyers. Outwardly, this streamlined process seems like a bargain — but there's a bottom line you'll want to consider. With a PIW, your lender is NOT liable if the valuation turns out to be wrong. That's a benefit to lenders, but affords no protection to the buyer whatsoever. Could anything go wrong?The information in Fannie Mae's database is pulled from past appraisals done by professional appraisers. it might be accurate to some extent, but it won't necessarily be a current assessment of the exterior and interior quality in a building that changes from year by year. Without a professional appraisal of your home, new improvements and/or damages could easily be neglected by the system. Because of these deficiencies, you can imagine an instance where your property is valued 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 settling for far 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, professional appraisal usually costs a few hundred dollars, but it could save you a substantial amount more in the long run. With a Property Inspection Waiver, there is simply no guarantee you're getting an honest valuation of a premium asset. Bogris Appraisal LLC can help. Buying or refinancing a property is a big decision with big consequences. You should know without a doubt that you're getting a fair deal, and working with a licensed appraiser is the smartest action you can take. 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 examination of a licensed professional you trust. |