Appraisal waivers: What are they and how do I qualify for one?

Posted: June 17, 2020
By: Mara Rasumoff, Nations Lending

Whether you are in the marketing to purchase a home, or refinancing your current mortgage, one of the out-of-pocket costs that can come into play is a home appraisal. First, you or your loan officer will arrange for a qualified appraiser to come to the property in order to give their unbiased opinion on how much the home is worth. Many factors go into this decision including the home’s amenities, surrounding property values, current market trends, floor plan functionality, etc.

These steps are necessary for the home buyer or homeowner to show their lender that they’re not over-borrowing. It's a good idea to get the appraisal done as soon after your purchase offer is accepted as possible, and it often costs around $500.

But a newer trend has been gaining steam in the mortgage industry in recent years, and it could save you both the time and money spent on an appraisal. If you and your loan officer decide on a conventional loan for your purchase or refinance, and if the home is a single family-owned residence or single-family investment property, you may be eligible for an appraisal waiver.

An appraisal waiver happens when the loan underwriter deems that a new appraisal at the time of the new transaction is not necessary. So, if you fall under the qualifications described above, you must be anxious to know how you can get an appraisal waiver.

First, do a little research on two popular participating conventional loan programs that offer the possibility of appraisal waivers: the Fannie Mae Day 1 Certainty program and the Freddie Mac Loan Advisor Program. Next, talk to your lender about whether or not you qualify for these loan programs or if they can seek appraisal waivers on your behalf, outside of these two programs. Nations Lending is proud to participate in Fannie Mae's Day 1 Certainty program, and is often able to seek appraisal waivers for clients who go with other conventional loan programs as well.

One thing to be aware of as you discuss these options with your lender is that you do not need perfect or high credit in order to qualify for either of these programs. Underwriters are more concerned about your loan-to-loan value ratio, or LTV- a percentage calculated by dividing the dollar amount of the mortgage loan by the value of the home securing the loan. During the purchase process, this LTV calculation is used to determine if you qualify for a home loan. During a refinancing process, it is used to determine how much in the new refinanced loan you qualify for.

To recap, home appraisal waivers make for a smoother and more cost-effective process for borrowers. While no one is absolutely guaranteed an appraisal waiver, as long as you understand the qualifications and do your research, it’s worth it to talk to your lender about the possibility. If you would like some professional knowledge on home appraisals, waivers, loan programs, or any other mortgage related advice, call one of our Nations Lending Personal Mortgage Advisors today at 1-877-816-1220.

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