Will Appraisal Waivers Affect Your Homebuying Plans?

Securing a loan for a home you want to buy requires more than just the right credit score and down payment. Lenders are cautious about what they give out, as they can be hurt by providing mortgages that are larger than the value of the home being purchased. One way they protect themselves is through the appraisal process, a review that helps establish a property’s worth. That process has faced recent challenges due to the demand for homes growing at faster rate than home construction. You may have questions about this process now that there are new rules on appraisal waivers. Instead of waiting for an appraiser to perform an in-person review, you can instead have a desktop-based appraisal of the property take place. This alternative approach can shorten the buying process and even reduce costs, but you may worry about what it does to your ability to receive a loan.

FHL Texas supports prospective homebuyers in many ways. We provide important information for those who are entering the real estate market for the first time, but we also take care of people who are more experienced in property buying and selling. Our guidance can help you make sense of appraisal waivers and their impact on your housing plans. We can also help you determine if this change will affect your interest in refinancing.

The Role Appraisals Play In Lending And Homebuying

Without any information on the home you intend to buy, a lender will have no way of knowing whether your loan has the backing it needs. Giving a sum that is far larger than the property is worth means that the loan is poorly secured. Appraisals of properties and their surrounding areas make it possible to check on the likely value of a property. As important as this can be to the lending process, it creates challenges for buyers and the groups that supply mortgages. One challenge is that, simply put, sometimes there is more need for appraisals than people who can cover them. Offsetting that delay has become challenging for several reasons. The pandemic affected how easy any in-person services of all kinds were to perform. Another concern had to do with increased demand for refinancing, which requires its own appraisal process. Appraisal waivers became more common in order to clear these hurdles and help people complete plans to buy homes.

Do You Know How An Appraisal Waiver Might Affect Your Plans?

An appraisal waiver takes away the requirement for an in-person review. Instead, there are desktop-based evaluations that review the history of the property and surrounding area to determine the likely value of the space for sale. Removing the need to send someone to a property can shorten the time it takes to complete a review, and it also makes the process less costly. In other words, there are two benefits to buyers—you can potentially move forward with a sale more quickly, and you reduce costs associated with the sale.

How Lenders Assess A Property’s Value Without A Direct Visit

The ability to remotely gauge a property’s value can certainly be appealing from the outside. However, there are worries that the models used to perform this service are missing information only available through a direct visit. This can make lenders less comfortable with this option even as it helps them close more loans. Even before the pandemic and the changes in the housing market last year raised demand for appraisals, lenders were working toward alternative solutions. Those solutions have taken the form of desktop-based reviews that comb publicly available information to assess what a property should be worth and collate the data with Automated Valuation Models (AVMs). As this becomes a more common approach, the right data and models will prove valuable to making sure desktop-based evaluations give the right information.

Appraisal Waivers Can Affect Buying And Refinancing Plans

Refinances have been regarded as more eligible for waivers, making this change beneficial to those who want to take on new loan terms but worry about a long appraisal process. Refinancing plans are impacted by several factors. Interest rates, changing property values, and your current equity can all play a role in determining what you can expect from the process. Our guidance in refinancing can help you bring down your monthly payments, and we can talk to you about the potential impact of a cash-out refinance on your current and long-term financial plans.

FHL Texas Is Ready To Help You Enter The Housing Market And Find Your Home!

The accessibility of the appraisal waiver can have a significant impact on what you experience during your efforts to buy a home. Even with this change, the process can feel intimidating—fortunately, you can count on the support of FHL Texas! We provide guidance on mortgage matters to experienced and first time buyers alike. Our support can also prove valuable for those who are considering refinancing, investing in a property, or buying a second home. For more information on appraisal waivers or any other matters related to your real estate plans, call FHL Texas at 1-800-990-LEND (5363)!