Appraisal-free Mortgages are Going to be More Common

Streamlined changes are coming to the home buying process. That is the news being reported by Inman, and the described changes could save you hundreds of dollars in appraisal fees. Three years ago, Fannie Mae began waiving appraisals for qualified loans / properties as part of their “value acceptance” system. Fannie Mae estimates that they saved borrowers more than $2.1 billion during that time on loans that qualified for an appraisal waiver. In addition to saving the borrower money, the waiver system also saves time. This was all made possible by a combination of Fannie Mae’s large database of over 61 million appraisal reports, and proprietary analytics from its Collateral Underwriter system.

Starting on April 15th, Fannie Mae will roll out a new option for getting a loan approved without an appraisal – “valuation acceptance + property data” – that requires a full interior and exterior inspection that captures data and images throughout the property. Instead of an appraiser visiting a property, a data collector will do so while utilizing approved software and applications. A version of this process is already at play here in Sacramento, as I’ve learned that some loans have utilized the services of data collectors opposed to home appraisers during escrow and resulted in cost savings for the buyers and shorter escrows for all involved. Fannie Mae has approved six “value acceptance + property data” service providers thus far, with plans to evaluate and approve more service providers.

These modern valuation techniques, which use technology, data and analytics are allowing lenders, borrowers, and investors a more efficient process for successfully closing transactions. This month national lender, Guaranteed Rate, rolled out its “Same Day Mortgage” program, and in January lender Better announced their “One Day Mortgage.” Guaranteed Rate states that homebuyers that qualify for their “Same Day Mortgage” can close a transaction in as little as 10 days. This allows a financed buyer the opportunity to compete against all cash offers and to do so at lower costs. If you’re looking to purchase a home, then I encourage you to reach out to me so we can begin the home search together.