Monday, April 27, 2020

What’s a PIW Mortgage?


Is it possible to get a Mortgage Loan without Appraisal? Yes, with a PIW (Property Inspection Waiver) Mortgage, you can get a home loan without spending 100’s of dollars on home inspection.

During the home buying process, you need to go through underwriting with your lender which typically includes ordering a home appraisal. But for the past few years, a program has been rolling out which is known as “Property Inspection Waiver”. This waiver program allows you to get approved for a mortgage without an appraisal at all. It is available for both first-time home buyers and for people who want to refinance their mortgage under certain situations.

In this article, let’s find out how to waive your appraisal and why you would want to do this

What are Mortgage Appraisals?

A home appraisal determines how much is your home worth. It is an unbiased estimate of the market value of a property. Appraisals are conducted by the licensed appraisers, who provide their unbiased opinion about the market worth of your property.

Appraisers review both the interior and exterior of a house including the number of bedrooms and baths, square footage, location, view, lot size and the age of the house.

A home appraisal is a part of the home buying process. As all lenders order a home appraisal during the mortgage process so that there is a standard way to assess a property’s market value. This process helps lenders ensure that the money requested by the borrower for the home purchase is justified.

What is a Property Inspection Waiver Mortgage?

A Property Inspection Waiver Mortgage, also known as the Appraisal Waiver Mortgage, is a type of home loan that is underwritten without an appraisal of the property.

For this Appraisal Waiver to work, Lenders may use the already available data that estimates the fair market value of a property instead of relying on the newly appraised value.

The Government Sponsor Organizations including Freddie Mac, Fannie Mae, and GSEs already have programs in place for appraisal free mortgage loans and refinances to facilitate the citizens.

This Appraisal Waiver can significantly save both time and money for the homebuyers. According to a statement by Freddie Mac, the borrowers would save around $500 and will shorten the time it takes to get to the closing table by 7 days through this waiver program.

How to Qualify for a PIW Mortgage?

In order to qualify for a PIW Mortgage, a homebuyer must meet certain requirements. These requirements include

  •       Can only finance one-unit properties, including condominiums
  •       An LTV (loan-to-value) ratio of 80% or less is required on Primary Residences and Second Homes which ultimately means a down payment of 20%
  •       An LTV ratio of up to 60% is required for investment properties
  •       Limited Cash-out refinance transactions for Principal Residence and second homes

For homebuyers who are looking to refinance their mortgage, Fannie Mae specifically requires an LTV ratio of 90% for limited cash-out refinances and a 70% LTV ratio for regular cash-out refinances.

While most loans may not receive an Approval for this Inspection Waiver Program, we have been noticing an increasing trend of Applications and Approvals for this program from the past few months.

What Else You Need to Know About PIW Mortgage

The requirement for a 20% down payment to get approved for a PIW Mortgage is often not suitable for many homebuyers. This is why, the majority of the mortgage applications wouldn’t receive an Approval for the Appraisal Waiver Program.

Following are a few situations where a PIW Mortgage is not eligible

  •       Two-to-four unit properties
  •       Properties located in a disaster impacted
  •       Investment Property Transactions
  •       Leasehold Properties
  •       Mortgage Applications where the value of the subject property is $1,000,000 or greater
  •       Loan Applications that receive an ineligible recommendation
  •       Cooperative units and manufactured homes

For a PIW Mortgage to be considered for a refinance mortgage, there must be a prior appraisal for the subject property in Fannie Mae’s database and that appraisal must be associated with one of the borrowers on the mortgage. It also means that the properties that have never been appraised before are not eligible for this waiver program.

Bottom Line

If you decide to opt. for this appraisal waiver program, it will save you a few hundred dollars but remember that this means you are settling for an old estimate of your home market worth. Therefore, you have to determine whether this saving from your appraisal waiver is worth trading an updated estimate of your home’s market value or not.

Affiliated Mortgage streamlines the home loan process with new techniques and technologies to provide its clients a smooth and delightful mortgage experience. Contact our Loan Officer today to find out if you are eligible for an Inspection Waiver and whether this program is right for you or not.

Contact us at (605) 718-9820 or fill out a quick form below to let our mortgage experts help you with your VA loan.


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