THE MORTGAGE BROTHERS SHOW
No Appraisal Needed! — What is an Appraisal Waiver?
In this episode, we talked about appraisal waivers. If you’re getting a conventional loan on a refinance or purchase, you might not need to get an appraisal done on your home. About 20% of loans today are receiving appraisal waivers in the underwriting process.
What exactly is an appraisal waiver?
An appraisal waiver means you don’t need an appraisal. It waives you of the need to have one.
When are appraisals not needed?
Appraisals are documenting for the bank what the collateral, the home, is worth.
So, when an appraisal is waived, or not needed, it is the bank essentially saying, “we’re going to accept the value as you have put it on the application.” That’s part of our job. We make sure that the estimates in the application are going to be realistic, one of the most common of which is your home value. If you’re not able to do so, you’re unlikely to get an appraisal waiver, which is something we are able to help you secure.
When working with the borrower, we take the application and figure out what the value might be. Then, once this is all this is done, we submit it to an online underwriting engine.
Now you should also know that the only programs that commonly allow these waivers are conventional loan programs. You’ll never get a waiver on a jumble loan, a VA loan, an FHA loan. It’s conventional financing.
Are there cases where you still want to get an appraisal done?
Yes, especially if you are on the purchasing side, you may very well want to get an appraisal. If you’re buying a house and you think that the seller’s asking too much and you think an appraisal will actually show that the value is less, go ahead and get one. You don’t want a wavier on that house since the appraiser can come in and possibly help you lower the contract price.
How and when are appraisals typically given?
Number one is when borrowers have great credit, 760 and above. For borrowers with excellent credit, we’re seeing that they have to have at least 15% equity to start seeing them show up. Also, if someone has a lot more money than another borrower, but everything else is the same, the chances of a waiver go up.
One other factor that helps you get a waiver is if there are clear comparables to your house in surroundings. When there are good comparables it’s easier for the bank to estimate the value of your home.
What property types do appraisal waivers apply to?
Single-family and condominiums. Manufactured homes right now do not qualify. In terms of occupancy class, you’ve got your primary, second home, and investment. One of the qualifying factors is that the borrower’s not using any of the income being generated by the investment property.
Additionally, appraisal waivers are usually not accepted when family members are selling to each other.
So, what’s the purpose of all these appraisal waivers?
Believe it or not, the main purpose of these is to make the conventional loan industry a little more streamlined for all the borrowers out there, to save time and money.
Thanks for listening to and reading the Mortgage Brother’s show.
Please let us know if you have any questions you’d like us to answer on this podcast. You can email your questions to tom@AZMortgageBrothers.com or eddie@AZMortgageBrothers.com. Be sure to ask us for a free quote on your next mortgage. We will personally work with you and help you through the whole process.
Signature Home loans, LLC does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Signature Home Loans, NMLS 1007154, MLS number 210917, and 1618695. Equal housing lender.