Property Inspection Waivers: Worth the risk?If you're getting a loan for a home, your lender might give you the option to use a Property Inspection Waiver – or PIW – on your loan application. The PIW program, begun by Fannie Mae in 2017, allows you to be approved for a mortgage without an appraisal at all. It's a newer concept, and some lenders love it. But what prompted the change, and what risks are there for you as a home buyer? 
How does a PIW work?Essentially, your lender decides what your property is worth. They determine the value automatically on a computer, using a database from Fannie Mae rather than hiring a local appraiser to personally inspect the home you're about to buy. So, rather than a hands-on evaluation, lenders rely entirely on computer processes to sift through a pile of previously collected information. Get your appraisal from Appraisals by Tom today Get a quote onlineWho's qualified for a PIW?The program is currently limited, but it is being expanded regularly to include more types of transactions. Your property has to have records in Fannie Mae's electronic database, so homes which have never been appraised are not eligible for a PIW. What's more, you're required to have an excellent credit score and high assets for approval. Why is it applied?The waiver eliminates appraisal charges, and it can considerably shorten closing time for buyers. Outwardly, this process sounds like a good deal — but there's a key point you will want to recognize. With a PIW, your lender is NOT held liable if the assessment is wrong. That's a benefit to lenders, but terrible for the buyer. Is there anything that could go wrong?The information in Fannie Mae's database is derived from previous appraisals completed by professional appraisers. it might be relatively accurate, but by definition, it will not be a current assessment of the exterior and interior quality in a building that changes over time. Without a professional valuation of your home, recent improvements, renovations, or damages can certainly be overlooked by the system. Because of these shortcomings, you can imagine an instance where your property is valued too high by the system assessing 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 appraisal typically costs a few hundred dollars, but it could save you thousands in the long run. With a PIW, there is no guarantee that you're getting an honest valuation of your most expensive asset. Appraisals by Tom can help. Buying or refinancing a house is a big decision with big consequences. You should 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 home, nothing is more accurate than the careful examination of a licensed professional you trust. |