Is a Property Inspection Waiver worth the risk?If you are getting a loan for a home, your lender may give you the option to use a Property Inspection Waiver – or PIW – on your loan application. The PIW program, started by Fannie Mae in 2017, allows you to be approved for a mortgage without requiring an appraisal. It's a newer concept, and some lenders love it. But what prompted the change, and what are the risks for you? 
How do Property Inspection Waivers work?Basically, determining what your house is worth falls into the hands of your lender. They determine the value systematically on a computer, using a database from Fannie Mae instead of hiring a local appraiser to inspect the home you're about to buy. So, rather than a firsthand evaluation, lenders rely entirely on computer methods to sort through an array of previously collected data. Get your appraisal from Alpine Appraisal Services, Inc. today Get a quote todayWho can receive a PIW?The program is limited currently, but it is progressively building to include more types of transactions. Your property needs to have records in Fannie Mae's electronic database, so homes that have never been appraised are not eligible for a PIW. What's more, you must have an excellent credit score and high assets for approval. Why is a PIW used?The waiver removes appraisal charges, and it can substantially reduce closing time for buyers. On the surface, this streamlined process sounds like a good deal — but there's a bottom line you will want to recognize. With a PIW, your lender is NOT held liable if the valuation ends up wrong. That's a bonus for lenders, but terrible for the buyer. What could go wrong?The information in Fannie Mae's database is derived from past appraisal reports done by professional appraisers. This data might be accurate to a degree, but it won't necessarily be an up-to-date evaluation of the exterior and interior quality in a building that changes from year to year. Without a professional appraisal of your home, new improvements and/or damages can certainly be left out by the system. Due to these shortcomings, you can imagine a scenario where your home is valued too high by the computer program evaluating it. If that happens, you could run into issues when it's time to list it for sale. You could end up settling for less than you paid, and you'll have no recourse against your lender when the money starts adding up. What's the bottom line?An accurate appraisal usually costs a few hundred dollars, but it can save you a lot more in the long run. With a Property Inspection Waiver, there is clearly no guarantee you're receiving an honest valuation of your most expensive asset. Alpine Appraisal Services, Inc. can help. Buying or refinancing a home is a big decision with grand consequences. You should know without a doubt that you're getting a fair deal, and working with a licensed appraiser is the smartest action you can take. 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 examination of a licensed professional you trust. |