What is an Appraisal Waiver?
Summary: An appraisal waiver is when a mortgage lender waives an in-person appraisal. Lenders will then use automated information and data, such as recent home sales within the area, to determine the value of the home. Closing on your home quicker is one of the many benefits a home appraisal waiver provides. However, it is always advised to contact your mortgage lender and discuss the pros and cons before accepting a home appraisal waiver.
What is a Home Appraisal?
A home appraisal accurately assesses the value of your home to reflect its market-value worth. A home appraisal is beneficial for both a home purchase and a refinance. When purchasing, the home appraisal ensures listing prices accurately reflect the value of the home. When refinancing, the home appraisal evaluates the equity within the home.
What is an Appraisal Waiver?
An appraisal waiver is when a mortgage lender approves the removal of an in-person appraisal. Mortgage lenders will use automated information and data, such as recent home sales within the area, to determine the value of the home.
Qualifications and requirements to receive a home appraisal waiver depends on the mortgage lender.
Borrowers and homeowners who have a conventional loan for a single-family home or a condominium with one unit have a likely chance of receiving a home appraiser waiver. Borrowers and homeowners will also need to meet lender specific loan-to-value ratio (LTV). Reach out to your mortgage lender to learn more about their requirements and qualifications.
Additional situations, such as the following, can also allow borrowers and homeowners to receive a home appraisal waiver.
- New construction homes that have an as-is appraisal on file.
- A home purchase with a generous down payment.
- A home purchase in a high-needs rural area.
- The borrower will need to put a down payment that is 3% of the home’s value.
- For example, a borrower wishes to purchase a home that is listed for $250,000 and they put 3% down ($7,500) they may qualify for a home appraisal waiver.
- If a homeowner is refinancing to change the rate or term and does not intend to withdraw equity, they may be eligible for an appraisal waiver.
- If a buyer is purchasing a property with an all-cash offer, they can waive as many contingencies as they like such as a home appraisal.
Receiving a home appraisal waiver can expedite the home purchase and refinance process.
Below are some common usages of an appraisal waiver.
- Skip the in-person appraiser visit.
- Save the expenses of paying for an appraisal.
- Save time scheduling an appointment.
- Get the housing loan to closing more efficiently.
Although a great saving, there are also benefits to an in-person appraisal. In-person appraisers can spot issues and concerns automated systems cannot. Contact your mortgage lender and talk about the pros and cons before accepting a home appraisal waiver.
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