Property Inspection Waivers: Worth the risk?If you're 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 program, initiated 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 caused the change, and what risks are associated? 
How does a Property Inspection Waiver work?Essentially, what your home is worth is determined by your lender. They determine its value automatically on a computer, using 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 entirely on computer algorithms to sift through an array of previously collected data. Get your appraisal from JWD Appraisal service LLC. today Get a quote onlineWho's eligible for a PIW?The program's limited right now, but it's being expanded 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. What's more, you must have an excellent credit score and high assets for approval. Why do lenders use Property Inspection Waivers?The waiver eliminates appraisal charges, and it can shorten closing time substantially for buyers. At first glance, this simplified process sounds 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 an added benefit for lenders, but affords no protection to the buyer whatsoever. What could go wrong if I agree to a PIW?The information in Fannie Mae's database is pulled from past appraisal reports completed by professional appraisers. This data might be somewhat accurate, but by definition, it won't be a current evaluation of the quality of a building that changes over time. Without a professional valuation of your home, recent improvements, renovations, or damages could easily be overlooked by the system. Due to these deficiencies, it's easy to imagine a scenario where your home is priced too high by the computer program evaluating it. If that happens, you could run into problems when it's time to put it back on the market. You could wind 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?An accurate appraisal usually costs a few hundred dollars, but it can save you a great deal more in the future. With a PIW, there's simply no guarantee you're receiving an honest valuation of your most expensive asset. JWD Appraisal service LLC. can help. Buying or refinancing a property is a big decision with big consequences. You should know with certainty that you're getting a fair deal, and working with a licensed appraiser is the safest way to go. Computers and algorithms are in nearly every area of modern life, but when it comes to measuring the value of your home, nothing is more precise than the careful assessment of a licensed professional you trust. |