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I have a Pre-approved VA loan. Why must I pay an appraisal fee?

My loan officer called and said that I need to bring a check for $500 to have an appraisal done. She said that her bank would subtract this amount from any closing costs due at closing day. I am confused because she listed the $500 appraisal fee as a closing cost on the GFE, and under the VA, closing costs are not required to be paid.
  • July 06 2009 - Sheridan Hollow
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Answers (2)

As of May 2009 rules have changed regarding appraisals.  Now most banks must use a lottery system for appraisals to keep the playing field even.  The appraisal must be paid for up front to assure the appraiser is going to get paid regardless of whether the transaction is finalized.  It is a precautionary measure that allows the appraiser to be paid by the buyer, that way the bank is not stuck with appraisals that were never paid for because a transaction fell through....

NC Realtor
  • July 06 2009
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In most cases with VA or any loan program with high Loan To Value i.e. 97% - 103%  you will be required to deposit a small amount into escrow for inspections and/or fees and pay any 3rd party vendors upfront, i.e. your appraiser. Depending on how your Realtor and Loan Officer have worked together to get you the max. seller contributions, i.e. seller paid closing costs will determined if you'll receive your 500.00 back or not.
As for the GFE you received from your LO, he/she is required to list ALL your fees including your appraisal even though you have paid it upfront.
You will see it listed on your final closing statement,i.e.HUD1, as a POC, paid outside closing.

Hope this helps!
  • July 06 2009
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