If you’re in the market for a home or considering refinancing, there’s some exciting news that could make the process smoother and potentially save you money. The Federal Housing Finance Agency (FHFA) recently announced expanded eligibility for appraisal waivers on certain loans. This update aims to streamline the mortgage process and reduce upfront costs, particularly for borrowers with higher loan-to-value (LTV) ratios.
What’s Changed?
Previously, appraisal waivers were primarily available for loans with an LTV of 80% or less. This meant that for loans requiring less than a 20% down payment, a traditional appraisal was almost always required. Now, however, appraisal waivers will be offered for loans with an LTV as high as 97% in some cases. This is great news for borrowers, especially those seeking higher LTV loans, like first-time homebuyers who may not have a large down payment.
How Does an Appraisal Waiver Help?
An appraisal waiver allows the lender to forgo a traditional, in-person home appraisal in favor of using alternative data, like automated valuation models. Here are some key benefits:
- Reduced Costs: Appraisals typically cost between $300 and $600, an expense that can add up for buyers and refinancers alike.
- Faster Process: Without the need to wait for an in-person appraisal, the overall loan process can be shortened, potentially shaving days off the closing timeline.
- Improved Access: Expanding the LTV eligibility to up to 97% could benefit a wider range of buyers, particularly those relying on smaller down payments.
Who Qualifies?
The expanded waiver option is still subject to guidelines set by Fannie Mae and Freddie Mac, and not all loans will qualify. This change will mostly impact borrowers with strong credit profiles who are applying for low-risk loans, including certain purchase and refinance loans.
What This Means for You
If you’re looking to buy a home with a smaller down payment or considering refinancing, this update could make the mortgage process faster and less costly. At Your Mortgage Copilot, we stay on top of industry changes like this to provide our clients with the best options available. Connect with us to learn if you qualify for an appraisal waiver under the new guidelines.
For more detailed information, visit the FHFA’s announcement page.
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