Don't risk your investment with a Property Inspection WaiverIf you are buying or refinancing a home, your lender may give you the option to use a Property Inspection Waiver (PIW) on your loan application. The waiver program, started by Fannie Mae in 2017, allows you to be approved for a mortgage without needing an appraisal. It's a newer concept, and some lenders love it. But what caused it, and what are the risks for you? 
How do PIWs work?Essentially, determining how much your property is worth falls into the hands of your lender. They determine the value automatically on a computer, using an online database from Fannie Mae in lieu of hiring a local appraiser to inspect the property you're getting ready to buy. So, rather than a firsthand evaluation, lenders rely entirely on computer methods to sift through a trove of previously collected information. Get your appraisal from The Residential Appraiser today Get a quote nowWho's eligible for a Property Inspection Waiver?The program's currently limited, but it is including more types of transactions continuously. Your home needs to have records in Fannie Mae's electronic database, so homes that have never been appraised are not eligible for a PIW. Additionally, you're required to have an excellent credit score and high assets to be approved. Why is a PIW used?The waiver omits appraisal charges, and it can trim closing time substantially for buyers. At first glance, this streamlined process sounds like a bargain — but there's a crucial point you will want to recognize. With a PIW, your lender is NOT held responsible if the assessment turns out to be wrong. That's an added benefit for lenders, but a disadvantage to the home buyer. What could happen if I accept a Property Inspection Waiver?The information in Fannie Mae's database is pulled from past appraisal reports completed by professional appraisers. This data might be relatively accurate, but it won't necessarily be an up-to-date evaluation of the quality of a building that changes from year by year. Without a professional appraisal of your home, new improvements and/or damages can easily be neglected by the system. Due to these shortcomings, it's easy to imagine a situation where your home is priced too high by the program assessing it. If that happens, you could run into issues when it's time to sell. You could end up getting 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?A definitive appraisal typically costs a few hundred dollars, but it could save you thousands in the long run. With a PIW, there is clearly no guarantee that you're getting an honest valuation of a premium asset. The Residential Appraiser can help. Buying or refinancing a house is a big decision with grand consequences. You should know with certainty that you're getting a fair deal, and working with a licensed appraiser is the smartest move you can make. Computers and algorithms have assumed a place 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 examination of a licensed professional you trust. |