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A property inspection waiver (PIW) mortgage is a mortgage that is approved without a full appraisal report. Instead, PIW mortgages are approved through government-sponsored enterprises (GSE), Fannie Mae and Freddie Mac. These GSEs allow lenders to use available data to determine the market value of your property. As a result, a PIW mortgage does not rely on a newly appraised value.
You can save hundreds of dollars on a PIW mortgage since full appraisals usually take time and money to complete. Additionally, you can potentially avoid the risk of a new appraisal valuing your home lower than anticipated.
Do I Qualify for a PIW Mortgage?
There are specific criteria needed to qualify for a PIW Mortgage:
Your property must fall under one of two property types:
- One-Unit Properties
- Condominiums
Your property must be purchased as one of two purchase types:
- Primary residences up to 80% of the home’s value
- Secondary residences up to 80% of the home’s value
One of two refinance types must be chosen:
Limited Cash-out refinance:
- Loan-to-Value (LTV) ratio needs to be 90% or less on both primary and secondary residences. In other words, there needs to be at least a 10% down payment on your home.
- Investment properties require an LTV of 70%
Cash-out Refinance:
- Primary residences require 70% LTV
- Secondary residences and investment properties require up to 60% LTV
Pros & Cons of PIW Mortgage
Pros:
- Save time as full appraisals can take weeks to complete. Also, your loan will most likely close faster.
- Save money as full appraisals are usually expensive and can add up in closing costs
- Prevent a new appraisal from valuing your home lower than anticipated. This can potentially ruin your chances of qualifying for a loan.
Cons:
- Your lender is not held liable if your home's value is incorrect.
- You won't have an "up-to-date" value or assessment of your home, as a PIW mortgage relies on data pulled from previous appraisers