Normally, when purchasing or refinancing a home, your lender is going to require an appraisal of that home. Under certain circumstances, you might be offered an “appraisal waiver,” saving you the cost of the appraisal and the time required to get that appraisal. To get this waiver, Fannie Mae’s or Freddie Mac’s AUS must give you its blessing. The more favorable your LTV ratio, the higher your credit score and the lower your DTI ratio, the more likely you are to get that blessing. Of course, a lot depends on things you do not have any control over, like data Freddie Mac and Fannie Mae have access to on your home and the data available on comparable sales in the area.
Reasons not to accept the appraisal waiver. If you are buying a home, you may not want to accept the offer of an appraisal waiver.
- First, if you are not already convinced you are getting a good deal on the home, you might want to get a well-thought-out opinion of value from an actual licensed appraiser. If the appraiser’s conclusion of value is less than what you offered on the home, you are going to need that appraisal if you intend to renegotiate the purchase price with the seller.
- Second, if you accept the offer of the waiver but something in your loan application changes prior to the closing (income, credit score, or debt or savings balances), the offer of the appraisal waiver could be withdrawn, requiring an appraisal to be completed just days before the closing, when everything is hanging in the balance.
Bottom line, an appraisal waiver is generally a good thing, but make sure the waiver is a good thing for you before agreeing to it.
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