The process to get a new home loan typically takes around 30 days or more, according to Rocket Mortgage, with part of the reason being the time added for appraising a home and its inspection.
But now, technological advancements in the mortgage industry are steadily changing that appraisal process. Desktop and digital appraisals, which became more widely accepted during the COVID-19 pandemic, are simplifying the process within the mortgage industry and reducing the time it takes for consumers to obtain a mortgage.
Last year, Fannie Mae and Freddie Mac announced they would begin allowing desktop appraisal options for mortgage transactions, beginning in January and February of this year. Loans up to 90% loan-to-value (LTV) are eligible for this option, which allows appraisers to perform the appraisal from their desktop rather than a physical inspection of the property. A hybrid appraisal is a combination between the digital and traditional appraisal.
"With digital appraisals, everyone is looking at the same, comprehensive data set," said Scot Rose, chief innovation officer for real estate appraiser Class Valuation. "And any disputes are easier to resolve because everyone has the exact same view of the property."
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Digital appraisals could reduce time it takes to take out a mortgage
According to data from Class Valuation, digital appraisals could reduce the amount of time it takes to take out a mortgage by 50%.
"In traditional appraisals, appraisers would spend a significant amount of their time scheduling and driving to and from appointments," Class Valuation Chief Appraiser John Dingeman said. "But with new technology, appraisers can spend 100% of their time leveraging their expertise and completing reports. It makes things much more efficient."
Other experts agree that technology could change the game for getting a mortgage.
"It’s exciting to see the industry adapting to newer technology, especially tools like 3D scanning that can create accurate floorplans and capture other details appraisers generally could not without visiting the home," Rose said. "When leveraging the right technology, today we can literally create a digital twin of a home, including a virtual tour inside and out, providing appraisers with absolutely everything they need to be confident in their report without ever having to drive to the property."
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Lenders are pushing for further modernization
New analysis from Fannie Mae in its Mortgage Lender Sentiment Survey showed lenders are on board with further modernization. Specifically, the survey showed 94% of lenders agree that appraisal modernization efforts will be valuable for the housing industry.
Lenders cited "shortening loan origination cycle time," "enhancing appraiser capacity" and "lowering consumer/borrower costs" as the top reasons why more modernization is necessarily for appraisals. But some challenges to implementing technology included getting the entire industry to adopt it and integrating with their loan systems.
If you are looking to buy a home, choosing a lender that allows for digital appraisals can help speed up the process. Visit Credible to speak to a home loan expert and get all of your questions answered.
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