When buying a home, your lender will verify that your soon-to-be home is worth what you’re paying for it. To do this, the lender will request that you pay for an appraisal - an on-site property inspection conducted by a third-party, trained professional. Generally, this is the rule of thumb, but some buyers may be eligible for a property inspection waiver—an opportunity that may save time and money.
A property inspection waiver, or PIW, waives the need for an onsite appraisal. National lending organizations Freddie Mac and Fannie Mae, which underwrite many of the mortgages in the U.S., have troves of data on the existing U.S. housing stock. They may use this data to gather insight into the value of the property instead on an onsite appraisal. Data of the home's value can be gathered from:
- Public records
- Data from the Multiple Listing Service (MLS)
- Historical home values in the area
Eligibility for an appraisal waiver is determined by the property history, homebuyer profile, and local factors. This includes:
- A sufficient transaction history on the home and the community.
- The homebuyer has at least a 20% down payment, or the home is worth at least 20% more than what is borrowed.
- The homebuyer meets the necessary credit requirements.
Not every loan qualifies for an appraisal waiver. Most often, the loan must be for a single-family home or condominium. Usually, manufactured homes, newly constructed homes, and multi-unit properties do not qualify for these waivers. They are available on refinance and purchase transactions.
Benefits of a Property Inspection Waiver
There are numerous benefits to a property inspection waiver, such as:
- You may gain loan approval on the home more quickly
- You don’t have to pay for an appraisal—this can save you up to $700.
- You may be able to get a shorter rate-lock period, which may help reduce interest costs over the long term.
At Premia Relocation Mortgage, our team works one-on-one with you to determine if you're eligible for an appraisal waiver. The process is quick and easy with our DigitalMove technology. Our team is available to discuss this product feature any time.
Sep 18, 2020