November 25, 2016
If you are considering an FHA home loan in 2017, the FHA appraisal fees and other appraisal issues are likely something you’ll be thinking about soon. Planning and budgeting for a home loan includes anticipating FHA appraisal fees, hazard insurance, and required closing costs that won’t be included in the loan amount. Do you know how much to save up for such expenses?
We get many questions about FHA appraisals in our comments section. One common question has to do with the specific amount of the fee and how such fees are determined. We are also asked about refunds of the appraisal cost if the home is ultimately declared unsuitable for an FHA mortgage, or if the borrower chooses not to purchase the property for some reason.
The key to understanding both the FHA appraisal process and how the appraisal is priced? Remembering that an appraisal is a service that is rendered for a fee, rather than an end result for which a fee is paid.
The appraisal service costs a specific amount of money, which varies depending on the housing market. There’s no one set cost for an appraisal any more than there is one set cost for an oil change, computer repair, etc. All of these things are services for which the borrower pays a fee that is customary in that market.
If you need an appraisal in 2017, you’ll need to check with local appraisers to see roughly how much they charge in your area for the service. The FHA and HUD do not keep records of how much is charged or who offers these services.
HUD 4000.1 contains the rules and instructions for FHA appraisals including a section that discusses FHA appraisal fees. According to page 63, we learn, “The Appraiser and the Mortgagee or Mortgagee-designated third party will negotiate the appraisal fees and due date. FHA does not establish appraisal fees or due dates.”
So it’s clear from this reading of FHA loan rules that the FHA and HUD are not involved in setting prices for appraisals. This is also true of hazard insurance, broker fees, and other expenses related to your FHA home loan. Your lender can advise you on how much has been charged in the past for these expenses based on that person’s experience with other loans in your market.
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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