Is a Property Inspection Waiver 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, started by Fannie Mae in 2017, allows you to move forward with your mortgage without needing an appraisal at all. It's a relatively new concept, and some lenders love it. But what determined it, and what risks are associated? 
How does a PIW work?Basically, your lender establishes what your house is worth. They determine its value systematically on a computer, using an online database from Fannie Mae instead of hiring a local appraiser to inspect the property you're getting ready to buy. So, rather than a hands-on evaluation, lenders rely on computer algorithms to sift through a trove of previously collected data. Get your appraisal from Mountain Home Properties today Get a quote onlineWho can get a Property Inspection Waiver?The program is currently limited, but it's including more transaction types regularly. Your property 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're required to have an excellent credit score and high assets to be approved. Why is a Property Inspection Waiver applied?The waiver omits appraisal expenses, and it can cut closing time substantially for buyers. On the surface, this process sounds like a good deal — but there's a key point you'll want to consider. With a PIW, your lender is NOT held responsible if the assessment winds up being wrong. That's an added benefit for lenders, but presents no protection to the buyer. What could happen if I accept a PIW?The information in Fannie Mae's database is pulled from past appraisals completed by professional appraisers. This data might be somewhat accurate, but by definition, it won't be a current evaluation of the exterior and interior quality in a building that's constantly changing. Without a professional appraisal of your home, new improvements, renovations, or damages could easily be neglected by the system. Because of these shortcomings, it's easy to imagine a scenario where your home is priced too high by the system evaluating it. If that happens, you could run into snags 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 falls short. What's the bottom line?An accurate, professional appraisal usually costs a few hundred dollars, but it can save you thousands in the future. With a PIW, there's no guarantee that you're receiving an honest valuation of a premium asset. Mountain Home Properties can help. Buying or refinancing a property is a big decision with grand consequences. You should know without a doubt that you're receiving a fair deal, and working with a licensed appraiser is the smartest action you can take. Computers and algorithms are in almost 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. |