Skip to main content

What is a PIW Mortgage — The Absolute Guide One Should Know

 

About Property Inspection Waiver (PIW)

When a mortgage is eligible for an appraisal waiver, meaning, the loan can be approved without a full home appraisal report then it is called a property inspection waiver (PIW).

The two government-sponsored enterprises, Fannie Mae and Freddie Mac support the mortgage market and allow lenders to use existing data to originate the mortgage without asking for a real estate appraiser’s feedback are PIW.

A PIW Mortgage Qualifying Method

These appraisal waivers are offered only on conventional mortgages if a borrower is buying or refinancing a home then there are a few government mortgage refinance programs that don’t demand appraisals.

With a property inspection waiver, you pace up the loan process and save almost $300 or $400 which is a usual cost for a full home appraisal report.

Depending on whether you’re applying for a loan backed by Fannie Mae or Freddie Mac your appraisal waiver will change.

  • PIW options are offered by Fannie Mae on their loans approved through the Desktop Underwriting (DU) automated underwriting system.

The most important factor to qualify for an appraisal waiver is your loan to value (LTV) ratio which is a measure of how much of your home’s value you’re borrowing.

Any way to qualify for a PIW, the borrower would either need to make a down payment of at least 20% on a home purchase or should have equity in their home of at least 10% on limited cash-out refinance.

If borrowers want to get extra money above what they currently owe with a cash-out refinance then they need more equity for an appraisal waiver.

As mentioned earlier depending on various factors the eligibility for PIW will change.

Property type: If the property is of a single unit or a condominium

Purchase type: Principal residences and second homes up to 80% of the home’s value

Refinance type

  • Limited cash-out refinances:

Up to 90% LTV for primary residences and second home

Up to 70% LTV for investment properties

  • Cash-out refinances:

Up to 70% of the value of primary residences

Up to 60% of the value of second homes and investment properties

Understanding Mortgage Appraisals

To determine how much your home is worth a home appraisal is needed. A licensed real estate appraiser conducts an appraisal and provides a neutral assessment of the home’s value.

An inspection is performed by the appraiser of the home’s interior and exterior state, design, and features to find out its value compared to recent home sales in the area.

During the homebuying process, you’ll get an appraisal and it is reviewed by lenders to make sure that the purchase price is correct and is used to calculate how much of the home’s value can you borrow.

A borrower may also need an appraisal for a mortgage to refinance so the lender can confirm your value is high enough to replace your current mortgage with a new one.

Pros and Cons of getting a Property Inspection Waiver

Pros:

  • A borrower need not spend money on the cost of the appraisal

Cons:

  • You will miss out on a third-party opinion of your home’s value

Things to Know About PIW

You may still request a full appraisal even if you’re eligible for an appraisal waiver. Similarly just because it’s offered to you, you’re not required to accept a PIW or ACE.

If you have concerns regarding the value of the home you’re buying, then an appraisal report from a licensed real estate appraiser would be worth the extra expense to prevent you from paying excessively for a home.

For an extensive look at the home’s condition right from the roof to the foundation, you should always get a property inspection done.

Other PIW Mortgage Programs

Homeowners can take advantage of streamlined refinance programs if they have loans backed by VA, FHA, and USDA these loans usually don’t require an appraisal.

Neither do these programs require any proof of income which is an added bonus.

Conclusion

An appraisal waiver is an offer to forgo the appraisal for eligible transactions.

For properties that are identified by the Federal Housing Finance Agency (FHFA) in high-needs rural locations, Fannie Mae offers a PIW mortgage.

To qualify for a PIW mortgage the property must be a primary residence with an LTV ratio up to 97%.

Some lower-income borrowers may be eligible provided they meet lending requirements for a PIW mortgage up to a 105% combined LTV ratio.

According to the Consumer Financial Protection Bureau, if a borrower decides to obtain an appraisal, their lender must provide a copy to them at least 3 days before the closing.

The borrower is not charged while requesting a copy of the original report.

https://www.compareclosing.com/blog/what-is-a-piw-mortgage/

Comments

Post a Comment

Popular posts from this blog

What is an Appraisal Contingency? — Best Guide for Homebuyers

  About Appraisal Contingency If a home is appraised for less than the purchase price included in the contract then there is a provision that is included in the purchase contract allowing homebuyers to back out of their contract this is termed as an  appraisal contingency  clause. Buyers who use financing to buy a house or are  buying homes  in areas where prices are volatile commonly use Appraisal contingencies. How do Appraisal Contingencies work? Purchase offers have appraisal contingencies inserted into them to notify the seller that the buyer intends to have the property appraised as part of their purchase for the financing process. If th e  property doesn’t appraise for the amount the buyer offered to pay then this contingency allows them the option of backing out of the contract without losing their earnest money deposit or facing other penalties. During an appraisal, a licensed professional is hired by the homebuyer to examine the property and evalu...
Post a Comment
Read more

Public Feedback Requested By CFPB

  The Home Mortgage Disclosure Act underwent certain changes and to evaluate whether it is meeting the stated goals of detecting discrimination in mortgage lending the  Consumer Financial Protection Bureau  is seeking comments. The CFPB requests for assessment of the mortgage disclosure law and checks if it meets the objectives of the  Dodd-Frank Act . To abolish discrimination in mortgage lending in 1975 the Congress enacted . The bureau said the request comes after an August report found that mortgage lenders as compared to white applicants were charging higher interest rates and denying credit to Black and Hispanic applicants. The   bureau said that with this evaluation the CFPB will be able to maintain a fair, competitive, and non-discriminatory mortgage market. They added that the assessment is an opportunity for the Bureau to get an idea if the earlier HMDA rulemakings have improved upon the data collected, thereby reducing loans on financial institutions,...
Post a Comment
Read more

What is Fannie Mae and Freddie Mac?

Understanding  Fannie Mae  And  Freddie Mac What is Fannie Mae and Freddie Mac? Fannie Mae or FNMA  is a nickname for Federal National Mortgage Association. It was established in 1938. It is a Government-sponsored Enterprise (GSE). In 1968, Fannie Mae ceased to exist as a government entity and became quasi-governmental, federally charted corporation to buy mortgages other than those insured by the Federal Housing Administration, otherwise known as FHA. Freddie Mac or FHLMC  is a nickname for Federal Home Loan Mortgage Corporation. Freddie Mac is also a government-sponsored enterprise (GSE) which was brought into existence in the year 1970 by the Congress. It provides competition to Fannie Mae and provides funds availability in the secondary mortgage market. What is Fannie Mae's and Freddie Mac's Role? Fannie Mae’s purpose is to create a secondary market for the purchase and sale of mortgages.  The secondary mortgage market ...
Post a Comment
Read more

How to Use Home Equity for Remodeling Projects

Important Guide How to Use Home Equity Everyone has to live somewhere and, everyone has to invest their money in someplace. So what happens when where you live, meets up with where your money is invested? Today we are going to discuss on  how to use home equity  for remodeling projects and things to know before using it for remodeling. For most homeowners, it is a choice between paying cash or borrowing against the equity that they have build up in their home. HELOC Or HEL? Interest rates  are still significantly low, and we are not sure how long they are going to stay that way. And home values are still rising at least on average. So taking out a home equity line of credit (HELOC) or a Home equity loan (HEL) may seem like a sensible financial move. Not always the case We have explained the difference between the HELOC and HEL in our blog post “ About Home Equity Loan  /  Home Equity Line Of Credit .” It depends on the individual’s n...
Post a Comment
Read more