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- What Are Netting Escrows & How Does It Work?: The Best Guide - January 2, 2024
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- About Home Equity Loans In Texas And How Can One Obtain It - November 27, 2023
About Appraisal Waiver Or Property Inspection Waiver
Many professionals in the mortgage business don’t know what an appraisal waiver or a property inspection waiver is.
If you are a borrower looking for a conventional loan on refinancing or a purchase, you might not need to get an appraisal done for your home.
In this post, we will learn what an appraisal waiver or a property inspection waiver is, with more related details.
The Term Appraisal Waiver or Property Inspection Waiver
An appraisal waiver or a property inspection waiver is an offer to waive the home appraisal for eligible transactions.
Appraisal waiver offers are issued to Desktop Underwriter (DU) using Fannie Mae’s database of more than 35 million appraisal reports in combination with proprietary analytics from Collateral Underwriter (CU) to determine the minimum level of property valuation required for loans delivered to Fannie Mae.
How Does Property Inspection Work?
An appraisal is done for documenting to the lender what the property is worth. When the lender runs the numbers of your loan through the DU, and if it fits in the guidelines, your loan would be qualified for a property inspection waiver.
The lender would inform you stating there is no requirement of the appraisal for your loan hence saving you the time and money for the same.
There are tons of data that gets considered when you are buying or refinancing a house. Since the lender uses an automated system, all your data like your credit score, your down payment, data about neighborhood sales, etc.
All are plugged into DU that is going to tell the lender whether or not the appraisal is needed. However, there is never any way to know for sure whether or not you will get an appraisal waiver.
Benefits Of Appraisal Waiver
When you get an appraisal waiver or a property inspection waiver, the first benefit that you get is to save money. An appraisal may cost you anywhere from $400 to $500 depending on the lender and the loan program.
With the appraisal waiver, you do not have to pay this amount. An appraisal can take anywhere between 7 to 12 days for the lender to get the final report.
It takes time to get the appraisal report because the lender has to first schedule the appraisal.
Post which the appraiser will get the inspection done. And finally, provide the report to the lender. When your loan is entitled to a property inspection waiver, you skip through all the steps hence closing the loan earlier than expected.
Will Every Borrower Qualify for Property Inspection Waiver?
Unfortunately not every borrower or loan would qualify for an appraisal waiver.
It is all in the system; Fannie Mae and Freddie Mac have set an algorithm in their automated evaluation system based on some complex data, and based on the data input, your loan may or may not qualify for the property inspection waiver.
However, if you have excellent credit and you are willing to make a down payment of 20 % or more, you have the best shot of getting an appraisal waiver on your loan.
Your credit score and your down payment come under controllable factors.
Other factors like the property type, the number of units in the property, and the price of the property are uncontrollable factors when it comes to property inspection waivers.
In the case of refinancing, your loan to value ratio could also play a role in determining whether or not your loan qualifies for an appraisal waiver.
Conclusion
The appraisal waiver or the property inspection waiver is a terrific option. It is a way to save off turn time on closing and also save up to $500 if your loan qualifies.
This also alleviates a lot of stress and complications with appraisals and loan processing.
So if you are looking to buy a new home or planning to refinance your current mortgage, make sure you ask your loan officer if he or she has pre-checked your loan for a property inspection waiver.
