Don't risk your investment with a Property Inspection WaiverIf you are 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 an appraisal. It's a relatively new concept, and some lenders love it. But what caused the change, and what are the associated risks? 
How does a PIW work?Essentially, the task of deciding what your house is worth falls into the hands of your lender. They determine its value systematically on a computer, employing a database from Fannie Mae instead of hiring a local appraiser to inspect the property you're about to buy. So, rather than a manual evaluation, lenders rely on computer methods to sort through a pile of previously collected data. Get your appraisal from Arizona Home Valuations today Get a quote nowWho can receive a PIW?The program's limited right now, but it's including more transaction types regularly. Your property needs to have records in Fannie Mae's electronic database, so homes which have never been appraised aren't 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 removes appraisal fees, and it can reduce closing time considerably for buyers. At first glance, this simplified process sounds like a good deal — but there's a bottom line you'll want to recognize. With a PIW, your lender is NOT held responsible if the valuation turns out to be wrong. That's great for lenders, but affords no protection to the home buyer whatsoever. What could happen if I accept a Property Inspection Waiver?The information in Fannie Mae's database is pulled from previous appraisal reports done by professional appraisers. This data might be accurate to some extent, but it won't necessarily be an up-to-date evaluation of the exterior and interior quality in a building that changes over time. Without a professional valuation of your home, new improvements and/or damages could easily be omitted by the system. Because of these shortcomings, you can imagine a scenario where your home is valued too high by the program evaluating it. If that happens, you could run into problems when it's time to sell. 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 is the bottom line?An accurate, professional appraisal usually costs a few hundred dollars, but it can save you a great deal more in the future. With a PIW, there's no guarantee that you're getting an honest valuation of your most expensive asset. Arizona Home Valuations can help. Buying or refinancing a house 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 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. |