Not every loan requires an appraisal!

Both Fannie Mae and Freddie Mac started collecting data on every appraisal they received a few years back (yes, big brother is always watching). They began storing every detail from the appraisals and created their own information database which pinpoints a specific property and looks at all of the recent information they have about properties around it in order to determine if they think the value or sales price is accurate. Since Fannie and Freddie are the primary sources of mortgage providers across the U.S., chances are they have all of the information for the home that just sold a few doors down. As long as they feel like the value is not inflated or they do not feel that you are in a declining market, they might offer you an appraisal waiver which means they are good to go with the value of the property offered.

Not every loan qualifies for an appraisal waiver, so let’s look at what is need to qualify.

Refinancing:

• Must be a one-unit property (including for condos).
• For a rate/term refinance on a primary residence or second home, you need at least 10% equity; 25% on investment properties.

Purchase:

• Must be a one-unit property, (including condos).
• You need at least a 20% down payment on a primary residence or second home. Investment properties aren’t eligible.

It is also worth a mention that if an appraisal has already been done (by the lender or recently by another potential buyer and lender where the deal may have fallen through), that value is used and the property would not be eligible for the waiver.

Freddie Mac

• Must be a one-unit property, including condos.
• The loan must be a new home loan or a rate/term refinance.
• You must have a 20% down payment for buying a home, 20% equity for refinances.

The waiver is property and borrower specific so it can be hit or miss but always worth a shot. I should also mention that the waivers are only eligible on Conventional Conforming loans and that not every lender will offer the appraisal waiver option due to their own internal guidelines/requirements. If you meet the down payment requirements listed above, I will always run your loan through both the Fannie Mae and Freddie Mac automated underwriting engines to see if either one gives us the waiver to help ensure your loan process is as smooth as possible! As always I am here with any questions you might have!