Appraisal-free Mortgages

Freddie Mac recently extended its new automated appraisal waiver program from qualifying refinances to qualifying purchase loan applications. This could save borrowers hundreds of dollars and as much as seven to 10 days toward an earlier closing.

Using new technology called the Loan Advisor Suite,® part of an automated collateral evaluation (ACE), Freddie Mac uses data from multiple listing services, public records, and historical home values to determine risks to lenders and borrowers. It calculates whether the loan, borrower and the subject home qualify for an appraisal waiver. If the waiver criteria are met, the lender will receive real-time risk assessment feedback.

Like other technologies have interrupted and sometimes decimated existing business models like travel agencies and bookstores, the appraisal waiver has the potential to disenfranchise licensed appraisers. The result is that consumers may be able to save some money, but at the price of doing their own due diligence.

Just as you have to choose a hotel room from photos and reviews, instead of taking the recommendation of an experienced travel agent, some industry professionals advise that buyers get their own appraisal, even if their loan qualifies for the waiver. The reason is that the condition of the home under review, particularly interior renovations, may not be included where it would be included in an on-site appraisal.

Appraisals can be deal-makers or deal-breakers. If you believe your appraisal is too low, you can protest it with your own information. Ask your local Berkshire Hathaway Home Services network professional for help.

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