Have you ever wondered how some property owners manage to skip the traditional appraisal process during home buying or refinancing? It seems almost too good to be true, right? Well, today we delve into this intriguing topic to unravel the mystery behind how properties qualify for an appraisal waiver.
What is an Appraisal Waiver (DIW)?
An Appraisal Waiver enables a borrower to skip the in-person appraisal process. Instead of sending a licensed appraiser to inspect the property and assess its value, Fannie Mae’s automated underwriting system, Desktop Underwriter® (DU), approves the waiver based on data already available. This saves time and can also lower costs for the borrower.
How Does a Property Qualify for an Appraisal Waiver?
Eligibility for an appraisal waiver is determined by Desktop Underwriter® (DU), which evaluates several key factors:
Property Type: Appraisal waivers are typically available for single-family homes, condos, and certain investment properties. However, they are not available for multi-unit properties or new construction.
Loan Purpose: Appraisal waivers are often available for:
Refinances: Primarily for certain types of rate-and-term refinances.
Purchase Transactions: Available in specific situations when the loan amount and value fall within acceptable parameters.
Loan-to-Value (LTV) Ratio: The LTV ratio should fall within Fannie Mae’s guidelines. Generally, lower LTV ratios (higher equity) increase the chance of qualifying for a waiver.
Borrower Profile: The borrower’s credit score, debt-to-income ratio, and other qualifying factors influence whether an appraisal waiver is granted.
Property Data Availability: The more data DU has on the property, such as previous appraisals or public records, the higher the chance of an appraisal waiver being offered.
Why Use an Appraisal Waiver?
Faster Loan Process: Eliminates the time required for scheduling and completing a traditional appraisal.
Lower Costs: Saves the borrower the cost of an appraisal fee.
Less Hassle: Removes the need for an in-person inspection, especially beneficial in competitive markets.
Limitations:
An appraisal waiver is not available for all loan types or property types.
The lender still retains the right to request an appraisal if deemed necessary.
Lenders use DU to determine if a loan qualifies for an appraisal waiver, and approval depends on the specific circumstances of the loan and property.
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