One way to save cash on refinance: is an Appraisal Waiver: This is how it works.

Dated: August 7 2020

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One way to save cash on refinance: is an Appraisal Waiver: This is how it works.

In this era, we are all looking for ways to save money. The way business is done is changing by the day. Real estate is no different. Ther are many ways to save on refinancing or financing a home this is a vaiable option for some. It is called an in-person appraisal. This is how it works...

What is an appraisal waiver?

When you're buying or refinancing property, your lender typically engages an independent appraiser to visit your home, to study it inside and out, analyze your neighborhood, and review nearby home sales among other factors. Appraisers help lenders better understand the risks of helping you buy or refinance a particular house. After all, your home serves as the loan's collateral, meaning that if you stop paying your mortgage, your lender can foreclose on your property, take it over, and then sell the place to recoup its losses, your home is your greatest investment it’s only right you make the best of it protecting your interests.

With an appraisal waiver, however, also known as a property inspection waiver, the loan is underwritten without hiring an appraiser. Instead, the lender assesses the property.

Appraisal waivers were once rare, but the coronavirus pandemic has made them more popular. Because of the pandemic many appraisers don’t want the risk of person to person contact. Offering an appraisal waiver means lenders can skip sending an appraiser—a living, breathing human being—into a home. In the era of COVID-19, an appraisal waiver is a safer, healthier option that helps limit the potential spread of the virus, stated Kevin Leibowitz, mortgage broker and founder of Grayton Mortgage.

COVID-19 aside, appraisal waivers can also help streamline and speed up the loan approval process. This can be a huge relief in areas where professional appraisers are hard to find, and in high risk areas, which could cause a loan closing to drag on for much longer than necessary.

An appraisal waiver also helps save money. Independent home appraisals range in price from $200 to $750, depending on where you live. And since the borrower typically pays the appraisal fee, that’s extra cash in their pocket.

Who is eligible for an appraisal waiver?

First, let me make it abundantly clear, appraisal waivers aren’t an option for every loan. Generally speaking, your loan may be eligible if you're buying or refinancing a single-family home or condo (even if it's a second home or investment property). Eligibility is also dependent on how much you’re borrowing in contrast to the value of the property (often referred to as loan-to-value ratio). In most cases manufactured homes, co-ops, multiunit properties, and new construction homes generally aren't eligible.

Because mortgage rates have been at or near record lows for quite some time, and because appraisal waivers are also relatively new, they are most commonly granted during a refinance. However, an appraisal waiver can also apply to a home purchase.

How to apply for an appraisal waiver

If you want to find out if you’re eligible for an appraisal waiver? Just ask your lender. From there, your lender will typically submit some information about your property to Fannie Mae and Freddie Mac, institutions that buy mortgages from banks and lenders.

Fannie Mae and Freddie Mac have special underwriting technology that helps lenders meet these two institutions' loan requirements. The technology evaluates properties by using data from millions of home sales from across the country. It analyzes your loan, then produces a simple yes or no for appraisal waiver eligibility. If it’s a yes, the lender lets you know, and you decide whether to take advantage of this option.

Take heed that even if you’re eligible for an appraisal waiver, it doesn’t mean you have to take it. Since it's your home and you're spending hundreds of thousands of dollars, you can choose to accept the waiver or ask your lender to order an in-person appraisal.

So, can a property be accurately assessed without an independent, in-person appraisal? Experts are somewhat divided on this issue, although appraisal technology has gotten fairly sophisticated.

"In a waiver situation, they truly have it down to a science," says Jeremy Sopko, CEO of Nations Lending.

Rick & Angie Decker are realtors with Local Homes and Land Real Estate. When life  pushes you into a new chapter we're here to help you enter that chapter. We have years of experience helping others meet their goals and finding their forever home. Give us a call today at 843-499-6872 or email us at rnadeckerteam@gmail.com

Reference

What Is an Appraisal Waiver? A Way To Save Cash on a Refinance. (Kuta, S. Jun 29,2020.)  Retrieved from https://www.realtor.com/advice/finance/what-is-an-appraisal-waiver-pros-and-cons/

Rick & Angie Decker, Realtors
843-499-6872
Email: rnadeckerteam@gmail.com


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Decker Team

Rick and Angie Decker work together as The Decker Team and they specialize in both Commercial and Residential real estate.. Angie entered real estate part time in 2016 while also working as an Operati....

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