Are Property Inspection Waivers worth the risk?If you are buying or refinancing a home, your lender might give you the option to use a Property Inspection Waiver (PIW) on your loan application. The PIW program, introduced by Fannie Mae in 2017, allows you to move forward with your mortgage without requiring an appraisal at all. It's a newer concept, and some lenders love it. But what motivated the change, and what risks are there for you as a home buyer? 
How do Property Inspection Waivers work?Essentially, your lender decides what your home is worth. They determine its value systematically on a computer, employing an online database from Fannie Mae in lieu of hiring a local appraiser to personally inspect the property you're about to buy. So, rather than a hands-on evaluation, lenders rely solely on computer algorithms to sort through an array of previously collected information. Get your appraisal from Ab2, Inc. today Get a quote nowWho's eligible for a Property Inspection Waiver?The program's limited currently, but it's being built regularly to include more transaction types. Your home has to have records in Fannie Mae's electronic database, so homes which have never been appraised aren't eligible for a PIW. What's more, you're required to have an excellent credit score and high assets for approval. Why do lenders use PIWs?The waiver cancels out appraisal fees, and it can shorten closing time substantially for buyers. On the surface, this streamlined process seems like a good deal — but there's a bottom line you will want to consider. With a PIW, your lender is NOT held liable if the valuation winds up being wrong. That's great for lenders, but terrible for the buyer. What could go wrong if I accept a PIW?The information in Fannie Mae's database is pulled from previous appraisal reports done by professional appraisers. This data might be accurate to some extent, but by definition, it will not be a current evaluation of the quality of a building that's constantly changing. Without a professional valuation of your home, new improvements, remodels, or damages can easily be omitted by the system. Because of these shortcomings, you can imagine a situation where your home is priced too high by the program evaluating it. If that happens, you could run into issues when it's time to list it for sale. You could end 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?An accurate, professional appraisal typically costs a few hundred dollars, but it could save you a great deal more in the long run. With a Property Inspection Waiver, there's no guarantee that you're getting an honest valuation of your most expensive asset. Ab2, Inc. can help. Buying or refinancing a home is a big decision with grand consequences. You should know with certainty that you're receiving a fair deal, and working with a licensed appraiser is the smartest way to go. Computers and algorithms are in nearly every area of modern life, but when it comes to measuring the value of your property, nothing is more precise than the careful examination of a licensed professional you trust. |