August 29, 2012
When a buyer looking for a home to purchase with an FHA mortgage finds a home, before the loan can be approved there must be an FHA appraisal.
This appraisal will determine the FHA loan amount which is based on the fair market value of the home, not the asking price set by the seller.
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.
But some borrowers still walk away from the property, not liking the terms or the price. The first question many of these house hunters want to ask after choosing not to purchase the property is whether the FHA appraisal fee can be refunded.
It’s not surprising that a buyer would ask; when appraisals in some markets can cost nearly $500, who wouldn’t want the money back? Unfortunately, appraisal fees are non-refundable for one very good reason. They are payments for a service rendered, the same as for any other type of service.
The appraiser is paid to do the appraisal work–the outcome is not part of the payment agreement. Otherwise, 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 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 buyer or seller.
Do you have questions about the FHA home loan process? Ask us in the comments section.
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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