No Appraisal Necessary

 In First-Time Home Buyers

When someone buys a house, everyone worries about the appraisal.  Will the value be as high as the offer price? If it’s not, will the deal fall apart?  Imagine if you didn’t need an appraisal. How nice would that be? Here’s the good news.  Sometimes, you can get something called an Appraisal Waiver.  

When a real estate agent sends us a contract between a buyer and a seller, the first thing we do is run the loan file through the Fannie Mae underwriting software.  We already do that before we issue someone a pre-approval letter, but this time, we’re using the exact property address.

Sometimes, the software tells us we don’t need an appraisal.  The decision is based on a review of the 29 million appraisal reports that Fannie Mae has in its database.  If, based on a review of that data, Fannie Mae determines that the sales price is reasonable, we don’t need the appraisal.

How does this affect you?  If you are the buyer, it tells you that you are not over-paying for the property, and it saves you the cost of an appraisal, which is usually about $500.

If you are the seller, it tells you that you were not unrealistic with the listing price, and you can breathe a sigh of relief knowing the transaction will not fall apart because of appraisal issues.

If you are one of the real estate agents (for either the buyer or the seller), it tells you that one of the major hurdles in getting the loan approved has been avoided, and there won’t be any need to extend the closing date because of appraisal issues.

Not every loan property will receive an appraisal waiver, but as the size of Fannie Mae’s appraisal database grows, more and more properties do receive one.  

One word of caution.  For the software to be able to issue the appraisal waiver, all the borrower’s loan information must be entered into the software correctly.  If income, assets, or the property address was entered incorrectly, the appraisal waiver may not be issued, and if it is, it may not be honored by Fannie Mae.  Make sure you are using a lender (like us) who understands the nuances of the software and thoroughly understands the underwriting guidelines.

Appraisal waivers are also available to borrowers who are refinancing their current mortgage.  Again, they are not available all the time, but they are becoming more common as the size of Fannie Mae’s appraisal database grows.

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