Declined refinance offer, but now we owe?

[Hope]

My husband and I began investigating refinancing our home and the initial figure we were given were good.

We have a FHA loan and have never been though a conventional loan process. The rough numbers had us saving about $100 a month and gave us some cash out for some home improvements.

When the final offer was made we decided to decline because none of the final numbers were close to the original and our home appraised at about $10,000 less than expected. We were not going to save any money on our monthly payment and the cash out was less than half of what was originally mentioned. I do understand that until everything is sorted through and all the numbers are run it is not easy to determine what the outcome will be.

When I told the loan officer we would not be accepting the offer she wanted to know how we wanted to pay for the appraisal. I am beside myself! She never said that was something we had to pay for. She asked for me to send financial documentation and we signed papers to release some information. She informed me that she was going to order an appraisal but never indicated how much it was going to cost. I assume that if we had gone to closing it would have been included in the closing costs but we are not closing.

I guess I did not do as much homework as I thought I had because I never ran across anything like this when I was looking into refinancing options and FAQ's. How did I agree to this without knowing and I do not have copies of any of the papers she had me sign.

Can someone help me understand how this works?

Hope
Belleville, IL

[Dan Auito]

Hope, it is generally the practice of the homeowner (loan applicant) to pay for in most cases a limited (Drive by Appraisal) to give the lenders an assurance that the asset indeed does have the needed value to secure the loan.

If you where just inquiring about a good faith estimate of costs and benefits then there would be no appraisal required at that point and in fact the appraisal cost figure would have been represented in the estimate.

If you had signed documents which led the loan processor to believe you would be getting the loan and they went the extra step of calling for and getting that appraisal in there process of doing the loan then it would seem reasonable that you would be on the hook.

I've been stung with survey bills like this when the lender called for that and in the end I too decided otherwise and had to pay.

What type of appraisal was it? a full or limited? if you do in fact have to pay I would ask for a copy before doing so, note: the lender is not required to give you a copy as it was for them, paid for by you. I know it seems unfair but that is the way it is! (A little balk from you if you don't get a copy would probably get their copy machine printing for you.

How much do they want for this appraisal? The question really is, did you commit to doing this loan or did you just inquire for a good faith estimate?