How to navigate mortgage appraisal situations during the Coronavirus pandemic

One of the things that have changed since the coronavirus has taken shape is how mortgage lenders are viewing appraisals. If you’re buying or refinancing a home here’s what you need to know…

If you have a very good strong financial package typically 20% equity with good credit score and sufficient savings in the bank it’s very possible you might be able to get an appraisal waiver. An appraisal waiver is determined by an algorithm that Fannie Mae and Freddie Mac have in place.  Both Fannie & Freddie do not provide any guidelines to lenders on what is specifically going to constitute an appraisal waiver. It becomes a roll of the dice which is 50-50 you may or may not need an appraisal for purchasing or refinancing a house. Some lenders might tell you can only get them on refinances which is not true, sometimes on purchases you can also get appraisal waivers.  A word to the wise if you’re buying a house and you get an appraisal report it could be a negotiating tool that may parlay into helping you get the house price for lower so keep that in the back of your mind as an informed home buyer.

Conventional mortgages lenders are allowing drive-by appraisal reports for purchase transactions and for rate and term refinances.

Cash-Out refinances automatically require a full appraisal report.

FHA mortgages for purchase and rate and term are also drive-by appraisal acceptable.

Cash-Out refinances automatically require a full appraisal report.

VA mortgages have the same requirements as identified above much like Conventional and FHA, but it is up to the individual appraiser if they’re going to allow a drive-by appraisal report.

Additionally, if the value of the property is $1millon or over a full appraisal report is required.

(Note on a refinance Fannie  Mae or Freddie max must own the mortgage for a drive-by appraisal)

Here’s why these changes are uniquely beneficial for borrowers. Prior to the pandemic, a full appraisal report was required on everything. The value of a full appraisal report versus a drive-by is you might get a better value on a full appraisal report than you will on a drive-by.

The cost for both the drive-by appraisal and a full appraisal report is the same. So if your value is in jeopardy or if you have a very high loan-to-value getting a full appraisal report may help you attain better mortgage rates and terms even though you might not necessarily need a full report.

The choice is yours. You are not required to get a drive-by appraisal report (unless cash-out refinancing) you’re just required to get an appraisal. It is always a good rule of thumb to make sure there’s a net tangible benefit for what you’re trying to accomplish and then figure out with the lender of your choice which direction you want to go.

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