Are you looking to refinance your home or investment property? The Federal National Mortgage Association (Fannie Mae) is introducing a waiver that could relieve refi clients the responsibility of paying for an appraisal during the refi process.
A property inspection waiver (PIW) can let clients avoid paying appraisal costs on refinances. On December 10, 2016, an enhanced PIW will be offered to all lenders to extend to their eligible clients for Fannie Mae refinances
Save Money with the Enhanced PIW
Lenders are required to get an appraisal done on most mortgage loans in order to get a property’s correct value. This is necessary because lenders aren’t allowed to make a loan for more than the house is worth. Now, clients will have a much better chance at skipping the appraisal if there’s already one on record.
“Clients refinancing one-unit properties of all occupancy types will now have a much better chance of being able to skip the appraisal process,” says James Milne, Capital Markets Project Manager at Quicken Loans. “For clients who receive a PIW, this will reduce the stress of waiting on an appraisal value, speed up the loan process, and save money spent to pay for the appraisal.”
Fannie Mae lists the following benefits of using a PIW:
- Faster loan process. Without having to request and review an appraisal, the enhanced PIW speeds up the steps in loan origination.
- Reduced uncertainty. With a PIW, the marketability of a home or investment property is no longer dependent on the lender to enforce.
- Lower origination costs. Without the extra costs associated with appraisals, a PIW can save you money.
Am I Eligible?
According to Milne, PIWs will become more common. The waiver is applicable only in refinance transactions. Those buying a home will not be able to take advantage of the PIW waiver offer. Thus, home buyers must get the home appraised by a certified appraiser in order to determine the home’s market value.
To be eligible to request a waiver, you must have a Fannie Mae-approved loan that you’re looking to refinance. If you’re looking to do a rate/term refi in order to lower your rate or change the terms of your loan, the loan-to-value (LTV) ratio can be no greater than 90% for primary and second homes. LTV is the amount of money you get for your loan compared to the overall value of your home. The lower this percentage is, the more equity you have in your home.
On a cash-out transaction for these residences, the maximum LTV for the waiver is 70%.
For investment properties, you need a 75% LTV or lower for rate/term transactions. To take cash out, a 60% LTV is required for the waiver.
For both primary and second homes, as well as investment properties, a previous purchase appraisal is necessary.
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