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Automated Appraisals Could Ease Home Buying Process

Automated Appraisals Could Ease Home Buying Process. 0

As of September 1, 2017, Fannie Mae and Freddie Mac are allowing automated appraisals for purchase-money mortgages. The move to “Automated Collateral Evaluation” is expected to shave 10 days off of the home buying transaction timeline, and save eligible borrowers about $500 on their closing costs.

Fannie and Freddie are not direct lenders, but these government-sponsored agencies are a large part of the secondary mortgage market, buying volumes of mortgage loans from banks and other front-line lenders. Their “Automated Collateral Evaluation” process won’t re-invent mortgage lending, but it does set the stage for the expanded use of technology in the mortgage approval process.

Not all home buyers will be able to take advantage of automated appraisals. Here is the basic criteria for allowing an automated appraisal:

  1. Property must be a one-unit residence, which includes single-family homes, condos and townhomes. (2-to-4 unit dwellings, co-ops, manufactured homes and leasehold properties are NOT eligible.)
  2. Loan-to-Value ratio must be 80% or lower.
  3. Property must be the primary residence of the borrower.
  4. Borrowers must meet other criteria involving credit-worthiness.
  5. Electronic data for the property must be accessible and reliable.

It should be noted that automation has its limits. On-site, professional appraisals help identify over-priced properties before the deal gets to the closing table. Your Exclusive Buyer Agent will help you navigate the ever-changing market conditions and mortgage requirements involved in the home buying process. Find an EBA in your area today!