October 20, 2020

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FHA Appraisal Refunds?

FHA Appraisal Refunds?

Some borrowers don’t understand the nature of the home loan appraisal process and as a result, they often ask a common question if the results of the appraisal don’t come back as expected.

The process works like this–a buyer goes looking for a home to purchase with an FHA mortgage. They find a home they want to buy and before the home loan can be approved, there is a required FHA appraisal. The appraisal is a tool for the lender, not the borrower, to help establish the market value of the property and insure the house meets minimum standards.

The home loan amount is based in part on the appraisal and homes don’t always appraise for what the borrower or seller thinks it should.

In situations where the appraisal comes back with a fair market value lower than the asking price of the property, some buyers struggle with a decision to walk away from the loan. In some cases it’s best to walk away, in others it may be a good idea to re-negotiate the sale price.

If you choose not to follow through with the sale based on the terms or the price, you may well wonder if you can get a refund for the FHA appraisal. After all, you didn’t commit to the mortgage, right?

Can the FHA appraisal be refunded in such cases? Keep in mind we are not talking about faulty appraisals or situations where there is a need to address how the appraisal was done.

It’s not surprising that a buyer would ask; when appraisals cost $400 or more, who wouldn’t want the money back? But appraisal fees are non-refundable.

Why? There is a very good reason. They are payments for a service rendered, the same as for any other type of service.

You paid to get the appraisal done, rather than paying for the RESULTS of the appraisal. The appraiser did the work the same as any house painter, car mechanic, doctor or dentist. The service is what you pay for, not the outcome.

Otherwise, it’s entirely likely that the appraisal system would not be fair or accurate–it would simply reflect that the borrower paid to be given the “right” appraisal results.

The bottom line is that no matter what the result, appraisal work is performed and the fee must be paid. The appraiser is not responsible for whether the results of the work match the sales price or the desires of borrower, lender, or seller.

Joe Wallace - Staff Writer

By Joe Wallace

October 9, 2020

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.

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