USDA Rural Loan – Paying For the Appraisal Report

Date: August 11, 2011

When purchasing a house a homebuyer must pay for an appraisal report upfront using their own funds. There are various scenarios in which a homebuyer can get the cost of their appraisal report returned to them at settlement. In order to do so the borrower must pay for their appraisal report using a debit/credit card, as opposed to a traditional credit card. USDA now considers returning the cost of the appraisal report to the borrower as a cash advance, which isn’t allowed under the USDA Guidelines, when using a traditional credit card to pay for the appraisal report.

A borrower should pay for the appraisal report using a debit/credit card that withdrawals the appraisal fee directly from the borrowers bank account under the following situations:

Seller is providing a closing cost credit to pay all of the closing costs and escrows. Determining the final cash-to-close is never an exact science and if the seller credit can be applied to cover the appraisal report then the borrower can get the cost of the appraisal report back at settlement.
Borrower house appraises for more than the purchase price and the loan amount is increased to cover the closing costs and escrows. In this situation the new loan amount can cover the closing costs, including the appraisal report, and the borrower receives the initial investment into the appraisal report back at the settlement table.

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