Whether you are buying, refinancing, or selling a property it is likely that an appraisal needs to be done. An appraisal report is an unbiased opinion on the value of a home and is used whenever a mortgage is involved. This appraisal process includes an independent appraiser visiting the home, taking pictures, measuring the square footage, studying the quality and condition of its construction, analyzing the neighborhood, and reviewing nearby home sales.
Recently, mortgage lenders have given borrowers the option of what we call an Appraisal Waiver (AW), or Property Inspection Waiver (PIW), which is an offer to waive the appraisal for eligible transactions. Instead of hiring an appraiser, the value of a home is determined by the lender using an automated database search from current and past valuation trends.
Essentially, Appraisal Waivers are algorithmically determined by Fannie Mae and Freddie Mac, who have collected these trends in a cloud that is constantly evolving. Mortgage lenders do not have access to this information, nor do they choose which borrower qualifies for an Appraisal Waiver. It is not determined by the creditworthiness of a borrower, but rather on what the neighborhood activity and trends of the subject property are and the overall equity position.
Pros of an Appraisal Waiver
In the midst of COVID-19, many individuals do not feel comfortable allowing an unknown appraiser, inside their home. An appraisal waiver cuts out the middleman and during this time is deemed to be a safer and healthier option.
An Appraisal Waiver can also help speed up the mortgage loan approval process. For borrowers in specific areas, finding an appraiser can be a difficult task, which could cause the process to extend past the original closing date.
In addition, an Appraisal Waiver can also save a borrower money. An appraiser can cost anywhere from $250.00 – $650.00 and this fee can be waived with an Appraisal Waiver.
Cons of an Appraisal Waiver
An Appraisal waiver is not eligible if the borrower owns a two-four unit property, is looking for a cash-out refinance, purchase an investment property/second home, or if the property is located in a disaster-impacted area.
Still have questions about Appraisal Waivers?
If there are additional questions about Appraisal Waivers, please feel free to reach out to Bluefire Mortgage Group’s loan originators at (760) 930-0569.