[StBernard] Beware of lenders advertising "Free" Appraisals

[Westley Annis]

Westley,
 
There's something I'd like to bring to everyone's attention.  As of late I'm
hearing and seeing a lot of ads where lenders are claiming "FREE APPRAISAL"
or "we'll cover the appraisal fee."  Let me say right up front with no
acceptions "there is no such thing as a free appraisal....period."  This is
one of the biggest myths (or scams) lenders will run to entice you to do
business with them.
 
I could explain why it's a scam, but it's easier to explain how by an
example.  Let's pretend for a moment you're sitting in the office with the
loan officer and you start going down the "good faith in lending estimate" -
that's what all lenders by law are supposed to give you which shows a
breakdown in all the various fees and costs of the loan, including the
interest rate and any loan points, etc.
 
As you go down the list you find yourself asking the loan officer "what's
this thing here called a 'processing research fee' for $300?  Also, what
this fee for another $250 called a "whatever, etc.?"....you get the idea.
They start hitting you up on what the mortgage industry calls "junk fees" or
I prefer "bullshit" fees...or they simply charge a higher fee for a standard
loan service that should typically cost less.  Another way they make back
the appraisal fee is by adding higher points to the loan or trumping up the
title & closing costs - trust me there's all sorts of ways to skin a cat
here.....or skin you.  Not to mention, they'll try to work those "fees" into
the amount of the loan which means you'll be paying three to four times for
them over the term of the loan.
 
Also, even though in reality you're paying for the appraisal, because the
lender has led you to believe they're paying for it means you are not
entitled to a copy of the appraisal - after all, they're paying for it.
When "you" pay for the appraisal, whether directly to the appraiser, the
mortgage officer, or elect to apply the cost to the loan, by law you are
entitled a copy of the appraisal under the Fair Credit Act.
 
The bottom line here is...there's no such thing as a free lunch - and
there's no such thing as a free appraisal.  This is not my opinion...nope,
this is what I hear from the many loan officers I appraise for who refuse to
advertise a "free" appraisal.  So if you can, I suggest you try to come up
with the approximate $325+ and pay for the appraisal yourself.  In the long
run, you'll be glad you did.
 
John Scurich