Don't risk your home with a Property Inspection WaiverIf you are getting a loan for a home, your lender might give you the option to use a Property Inspection Waiver (PIW) on your loan application. The waiver program, initiated by Fannie Mae in 2017, allows you to move forward with your mortgage without an appraisal. It's a newer concept, and some lenders love it. But what drove the change, and what are the risks for you as a home buyer? 
How do Property Inspection Waivers work?Essentially, your lender decides what your house is worth. They determine its value systematically on a computer, employing a 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 firsthand evaluation, lenders rely solely on computer algorithms to sift through a bank of previously collected data. Get your appraisal from Pacific Home Inspection & Appraisal today Get a quote nowWho can get a PIW?The program is limited right now, but it's expanding continually to include more transaction types. Your property needs to have records in Fannie Mae's electronic database, so homes which have never been appraised are not eligible for a PIW. Additionally, you need to have an excellent credit score and high assets for approval. Why do lenders use PIWs?The waiver omits appraisal charges, and it can reduce closing time substantially for buyers. Outwardly, this streamlined process seems like a good deal — but there's an essential point you will want to keep in mind. With a PIW, your lender is NOT held responsible if the assessment is wrong. That's an added bonus for lenders, but offers zero protection to the home buyer whatsoever. What could go wrong if I accept a Property Inspection Waiver?The information in Fannie Mae's database is derived 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 quality of a building that changes from year to year. Without a professional appraisal of your home, new improvements and/or damages can absolutely be missed by the system. Because of these shortcomings, you can imagine a scenario where your home is priced too high by the computer program evaluating it. If that happens, you could run into snags when it's time to put it back on the market. You could wind 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, 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 is no guarantee you're receiving an honest valuation of your most expensive asset. Pacific Home Inspection & Appraisal can help. Buying or refinancing a home is a big decision with grand consequences. You need 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 property, nothing is more precise than the careful assessment of a licensed professional you trust. |