Here’s a little tidbit most home buyers don’t know about: if you put 20% down on a home, you can waive your home appraisal. Keep in mind that this is different from a home inspection, which you should never waive.
An appraisal is when a home’s value is appraised—meaning that the value of a home is on the line. You never know what you’re going to get, because an appraisal can either raise or lower the value of the home in question. Appraisals can be a headache for everyone, especially when there are no good comparables near the home being appraised.
For those of you who aren’t familiar with comparables, comparables are houses similar in structure and location to the house being appraised. Their value is used to help appraisers estimate the value of a home, so that housing prices don’t vary too much within a neighborhood. But, housing values can change drastically just a street over, so finding a good comparable can be tricky.
You’ve probably heard that making a 20% down payment is the standard when buying a home. Home buyers are normally told that because by putting 20% down on a home, you’re avoiding the cost of mortgage insurance. But depending on the value of your home, and your current finances, it might be difficult for you to come up with that kind of money—it’s not couch cushion change, that’s for sure.
In fact, you can actually get away with making a down payment that’s as low as 3% of the home value you’re buying—but when you make such a low down payment, you have to order an appraisal, and I’ve already mentioned what a headache that can be.
By making a 20% down payment, you save yourself time and money, because you won’t incur an appraiser fee.
Due to the pandemic, more home buyers are shopping online for homes than ever before. According to a survey conducted by Zillow, 30% of people would buy a home completely online. And thanks to virtual tours, that consumer confidence has only increased.
If you’re dead set on getting your appraisal waived and want to make sure that you land the home you’re looking to close on, then pay the 20% down if you can afford it. It’ll speed up your home buying process by shaving off several days that would be needed to order, perform and then report the appraisal.
Now that COVID-19 has pushed us to new digital heights, take advantage of what that means for the future of home buying: less time wasted and faster closings.
If you’re curious about whether or not you qualify as a home buyer, then apply online today, and I’ll get back to you with a home value estimate.