What is an appraisal waiver? Which homes get the appraisal waiver? The complexity of appraisal waiver includes a number of criteria and not all inclusive for this article. For the purpose of brevity and simplicity, the below contains a general overview of the process. In most cases, buying or refinancing a home requires an appraisal. The appraisal protects you and the lender from paying or financing a home for more than it is worth. The appraisal generally takes place once your application is filled and initial documentation is reviewed. Most appraisals are valid for 120 days. The appraisal must be valid through your closing date. If your appraisal expires before your loan closes, then an updated appraisal may be required. The general cost of an appraisal varies based on the type and location of the subject property. The cost ranges between $200 to $600. However, in some cases, it may exceed that range.
What is an appraisal waiver? An appraisal waiver offers to waive the appraisal for eligible transactions. The offers are issued through Desktop Underwriter (DU) using Fannie Mae’s database or Loan Product Advisor (Loan Prospector) using Freddie Mac. The below list provides an overview of the requirements.
What are the eligibility requirements for appraisal waiver consideration?
- Loans that receive an approve and eligible recommendation
- One unit properties, including condominiums
- Limited cash-out refinance transactions
- Limited purchase transactions
What are the ineligibility requirements for appraisal waiver consideration?
- When the lender has any reason to believe an appraisal is warranted
- Construction and construction to permanent loans
- Rental income from the subject property is used to qualify
- Mortgage insurance provider requires an appraisal
- Loans that receive an ineligible recommendation
- Leasehold properties, community land trust homes, or other properties with resale restrictions
- HomeStyle mortgage products such as renovation and energy
- Two to four unit properties, cooperative units, and manufactured homes
- Texas Section 50(a)(6) mortgage
- Value of the subject property provided over $1M or greater
- A transaction using a gift of equity
- If a Doc File ID is provided that indicates an appraisal was already obtained
- When an appraisal has been uploaded to the UniformCollateral Data Portal within the prior 120 days from any lender
Keep in mind that a borrower always has a choice of requesting an appraisal. However, there is a cost associated with the request. Every case is different. Thus, it is best to make this determination case by case basis.