What Is An Appraisal Waiver And Is It Right For Me?

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Published on November 12, 2019

Purchasing a home can be an exciting yet stressful time. Many homebuyers don't fully understand their options during the mortgage process, and if they don't have the right lender working with them, may miss out on valuable opportunities.

At First Savings Mortgage, we are here to answer all of your questions and help you make the most informed decisions on your mortgage journey. In certain instances, you could save time and money by utilizing an appraisal waiver when completing your mortgage process. While appraisal waivers aren't for everyone, it is always a good idea to consider all of your options and if it could be a benefit to you.

What Is An Appraisal Waiver?

An appraisal waiver gives qualified home buyers the option to decline to have an appraisal done on the property they are purchasing. Instead of a traditional home value evaluation that is done by a local appraiser, the lender will use computer calculation programs and previous home value information to determine the value of the property.

What Are The Benefits Of An Appraisal Waiver?

The first and most obvious benefit of an appraisal waiver is the cost savings. As the home buyer, you are responsible for paying for the upfront cost of the appraisal. This is usually several hundred dollars, which could cut into your savings or down payment.

An appraisal waiver can also allow you to close your mortgage in a shorter amount of time. Without the need for an appraisal, you won't have to worry about scheduling the appraiser, working around the seller's schedule, and then waiting days to get the results. This could add days and even sometimes weeks to your closing schedule. In certain instances when a quick closing date is required, an appraisal waiver could make that easier.

Who Is Eligible For An Appraisal Waiver?

Fannie Mae sets the rules and regulations regarding who is eligible for appraisal waivers and what types of properties are eligible. To be considered, you must be a strong borrower with an excellent credit score. You will also need to prove your available assets.

The dwelling must meet certain qualifications as well as the borrower. There are specific LTV ratios based on the type of property that you must meet, as well as disqualifications for certain property types such as multi-family units or any property in a disaster-impacted area.

An appraisal waiver can also be denied any time the lender has a reasonable belief that an appraisal is necessary. The rules to be considered for an appraisal waiver are detailed and are continually reviewed and modified. Speaking with a qualified mortgage lender is the best way to know if you would qualify for an appraisal waiver.

What Should I Consider Before Getting An Appraisal Waiver?

You will want to be sure you understand your rights and what the consequences of not having an appraisal done on your home could be. If the valuation of your home is lower than your purchase price you will have negative equity going into the purchase.

The home buyer cannot hold the lender liable for incorrect valuations if there is no official appraisal completed. Making sure you know your rights and trust your mortgage lender is critically important when considering an appraisal waiver.

Each home purchase is different just like each home buyer is different. At First Savings Mortgage, our dedicated staff has been assisting home buyers in the D.C. Metropolitan area for almost 30 years. Our staff is here to help you understand your home buying journey and empower you to choose the best path for you. Contact one of our experienced loan officers today to see if an appraisal waiver is right for you.

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