Obtaining a mortgage to finance the purchase of a new home or to refinance a mortgage on an existing one is a pretty straightforward process. First, you get in touch with a mortgage broker from MortgageDepot to have all of your questions answered by one of our knowledgeable brokers. After we help you complete the mortgage application, we submit it to the lender offering you the best terms, and then we all wait for the appraisal to be completed.
Depending upon where the property is located, a borrower could wait weeks for an appraisal. Meanwhile, the lender and everyone else involved in the transaction must wait. If it seems as though there must be a better way to do things, there is, and Freddie Mac is ready to try it out.
Freddie Mac puts an end to the appraisal waiting game
The folks at Freddie Mac decided to follow the lead set by Fannie Mae and bow to the realities of modern technology by waiving appraisals when there is sufficient market data available on a particular property to permit them to determine its value. The two government-sponsored mortgage entities use algorithms and something Freddie Mac calls an automated collateral evaluation system.
The ACE system collects information from multiple listing services, public records and other data about homes bought and sold in a particular area and conducts an analysis. The result is a value estimate for the property being purchased or refinanced.
Time is not the only thing being saved by the new appraisal waiver program. Homeowners refinancing their existing mortgages and buyers purchasing will save the cost of the appraisal, which can be hundreds of dollars.
Eligibility guidelines for appraisal waivers
Expansion of the program refinance transactions to mortgages on home purchases required Freddie Mac and Fannie Mae to publish guidelines for eligibility, include the following:
- Restricted to one-unit properties
- Permitted for condominium unit purchases
- Property must be used as primary or second home
- Loan-to-value ratio up to 80 percent
- Value of property cannot exceed $1 million
Appraisal waivers are not permitted for the following types of properties or loans:
- Multiple-unit properties
- Investment properties
- Properties located in areas classified as disaster impacted
- Construction loans
- Manufactured homes
Property owners who refinance an existing loan will not be allowed to use the appraisal waiver program if the amount they are borrowing exceeds what is necessary to pay the current mortgage. So-called “cash-out” refinancing will still require an appraisal.
How MortgageDepot can help
Freddie Mac estimates that only 5 percent of the transactions it handles will be eligible for appraisal waivers. The brokers at MortgageDepot work for our borrowers to obtain the best deals in financing, including new loan programs. Whether through appraisal waiver programs, government-backed loans or conventional mortgage programs, we’ll find the loan and the program best suited to the specific needs of each borrower.
Our brokers specialize in finding solutions for borrowers presenting us with unique circumstances or situations. For the buyers whose dream home needs a lot of work, we have the FHA 203K loan program