Don't risk your home with a Property Inspection WaiverIf you're buying or refinancing a home, your lender might give you the option to use a Property Inspection Waiver – or PIW – on your loan application. The waiver program, introduced by Fannie Mae in 2017, allows you to move forward with your mortgage without getting an appraisal. It's a relatively new concept, and some lenders love it. But what prompted the change, and what risks are associated? 
How do PIWs work?Essentially, your lender decides what your house is worth. They determine the value automatically on a computer, employing an online database from Fannie Mae rather than hiring a local appraiser to inspect the property you're getting ready to buy. So, rather than a firsthand evaluation, lenders rely solely on computer algorithms to sift through an array of previously collected information. Get your appraisal from Willamette Valley Appraisal Professionals today Get a quote todayWho can get a Property Inspection Waiver?The program is currently limited, but it's being built continually to include more transaction types. Your home needs to have entries in Fannie Mae's electronic database, so homes that have never been appraised aren't eligible for a PIW. Additionally, you're required to have an excellent credit score and high assets for approval. Why is a PIW applied?The waiver cancels out appraisal charges, and it can shorten closing time substantially for buyers. At first glance, this simplified process seems like a good deal — but there's a crucial point you will want to consider. With a PIW, your lender is NOT held responsible if the valuation turns out to be wrong. That's great for lenders, but terrible for the buyer. What could happen if I accept a Property Inspection Waiver?The information in Fannie Mae's database is derived from previous appraisal reports completed by professional appraisers. This data might be somewhat accurate, but it won't necessarily be a current assessment of the quality of a building that's regularly changing. Without a professional appraisal of your home, new improvements and/or damages could certainly be overlooked by the system. Because of these shortcomings, you can imagine a situation where your home is priced too high by the computer program assessing it. If that happens, you could run into problems when it's time to put it back on the market. You could wind up settling for far less than you paid, and you'll have no recourse against your lender when the money starts adding up. What is the bottom line?A definitive appraisal usually costs a few hundred dollars, but it can save you thousands 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. Willamette Valley Appraisal Professionals can help. Buying or refinancing a house 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 smartest way to go. 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. |