do I still need pay for the appraisal fee even if my loan application was denied?

Question

I heard that an appraisal should never be ordered unless the mortgage broker is sure the loan is going to go through.but my loan application is denied.and I still need pay for the appraisal fee?
it is said that requirement has to be in writing.from my application form,I did not find that I have to pay for the appraisal fee even if loan is denied.

Answer 1

An appraiser is an independent person who wants to be paid for their work. Not their concern if the loan funds or not.

A mortgage broker is NEVER sure that a loan will go through, regardless of what they tell you.

One of the conditions of a loan funding is the lender's review of the appraisal.

It is often a risk of the borrower to pay for an appraisal without knowing if the loan will fund.

If you are working with an ethical mortgage person, they should have a fairly good idea of the value prior to the appraiser going out.

Was your loan denied because of appraised value or something else ?

Unless you had a different arrangement, sounds like you need to pay for the appraisal

Answer 2

It depends on the policy of the lending institution but generally, if the loan was denied after an appraisal is made, the fee is usually shouldered by the borrower.
However, if the denial was made prior to actual appraisal, the request for a refund of the appraisal fee is justified.

Answer 3

Typically yes, you're responsible to pay for the appraisal since it's being done on a house you're looking to buy/refinance. HOWEVER, if you did not authorize the appraisal, meaning you were not told before it was ordered, then I would see that you have a good argument not to pay it. This practice is very common with brokers, and is just one or many reasons why you should NEVER use a broker. In all reality the lender never should have ordered the appraisal unless they knew you - the borrower - was approved. Now, there's always the cases where the property doesn't qualify for whatever reason, but by the way you wrote the question that doesn't seem to be the case. All in all, if the lender/broker is trying to get the appraisal money out of you I would tell them you want to see documentation where you signed stating you agreed to pay for the appraisal whether the loan funded, got denied or was cancelled.

Answer 4

Yes, you are required to pay for an appraisal even if the loan is denied. I don't know what happened in your situation, but usually, the broker will try to get a value check from an appraiser in your area AND check the comparable (comps) themselves before the actual appraiser is sent. I don't know where you live, but in some area's, the comps are not available, or they can be in-conclusive. I'm a broker, and I always try to check value first. Lastly, a value check is just a reasonable look at home values in your area. The condition of a home, amenities, and some upgrades affect the actual value, as well as desirability of the area. The irony is, the lender will often research the appraisers assessment of value and in some cases will have the appraiser submit additional info to support the value submitted. It happens behind the scenes a lot these days. Sometimes, the lender will order an appraisal review, or even ask for a second appraisal, especially for unique properties. Why was the loan turned down?

Answer 5

Why not ask the Loan Officer to fax you a copy of a Conditional Loan Approval signed by an underwriter before the appraisal is paid for? That is perfectly reasonable and, though it may take a few days, easy to get an answer on. Faxed approvals are required on most purchase transactions before the transaction gets signed. That is how you know it can be done on refinance transactions too.

If your Loan Officer refuses, find someone else.

There are 3 answers on all loans. Approved, Denied, or Maybe (exceptions). If the Loan Officer knows you will get the exception, why not get it now? Why wait until you have paid for the appraisal so you are out the money?

Once you see the Conditional Loan Approval, then YOU can make the decision if you can meet the conditions.


(ok, rookies can give me thumbs down now)

---Updated 7/19---

I have read some of the other answsers. I wouldn't put any merit on some of these Loan Officers trying to use this as a forum for advertising.

Am I the only lender saying it is not okay for a Mortgage Professional to mislead clients? If you were misleading on your application, sure you should have to pay for the appraisal. But your question makes it seem that the Loan Officer you were working with was exaggerating to convince you of the likelihood of your application getting approved. Also, shouldn't your Loan Officer have gotten you approved first---before an appraiser went out?

Answer 6

Chris, unfortunately yes you do have to pay for an appraisal even if your loan application has been denied. If the appraisal was completed then it needs to be paid for and you can have a collection or judgment placed against you for the appraisal fee if you do not. Most mortgage companies charge you upfront for an appraisal on a purchase transaction. If you do not pay for the appraisal fee, most likely the mortgage broker will pay for it out of their paycheck and then it will be up to them to collect if from you. However, some mortgage companies as mentioned before will follow collection procedures. This is a judgment call by you as to whether you want to pay or not. Just keep in mind that if you don't it could eventually end up as a negative mark on your credit report (although this is not very common). Sorry to hear your loan was denied. Hopefully you can find a better broker to work with.
Ps: This rarely happens, that your loan is denied after the appraisal is ordered with a good mortgage broker.

Answer 7

This just happened to us! Our loan was denied and the appraisal was performed a day later. Are we entitled to a refund since the loan was denied prior to the appraisal? It's the lenders mistake and it should've been cancelled . Shouldn't the lender "eat" the cost?

Answer 8

Am I responsible for the application fee if the loan is turned down.

Answer 9

That's a tough one because the appraiser is independent from the bank. He only did the appraisal because he was called in to do it. he is not the banks employee. He may try to argue that the appraisal was for your home so you owe him. Did you sign anything requesting the appraisal? Maybe the bank did? If it was their request then maybe you can get out of it. not sure good luck

Answer 10

"Why was you denied" - classic answerer.

You are more than likely on the hook for the appraisal cost. One of the many forms you signed probably outlined those fees. Check the paperwork you received from the lender to see what you are responsible for.