Home equity loan mortgages have become a very popular way for people who are home owners to get money for things they could not have otherwise afforded to pay for in the past. Lenders are happy to give out the loans because if for whatever reason the borrower does not pay, they can simply foreclose on the home and easily recoup their cost of the mortgage because they never loan out anywhere near the cost of the actual mortgage. If you are going to go shopping for a mortgage, be suspicious if the lender online or otherwise suggests that they will pay for your appraisal.
Some second mortgage originators will claim that they are going to provide you with a free appraisal, but in the end you will be paying for it one way or another. The company has to make a profit so you are paying for it somehow. If it sounds too good to be true, it probably is. We all like free stuff, and you might even pocket a few hundred up front by them paying for the loan appraisal, but you will be paying for it eventually whether you realize it or not, so do not be fooled that you are saving any money if they are offering you a free appraisal on your home or automobile.
Here’s how they get you. They will pay the upfront cost which is bout $300 to $500 for the appraisal. You will think that you were a savvy consumer and saved some money. You go throughout the process of your loan with out any sign of suspicion. They will make up the money through some sort of origination fee, or by charging you a slightly higher interest rate than their competitors. After all is said and done, they’ve probably made much more than their $300 appraisal fee compared to everyone else who is in the business and doesn’t try to play sneaky games to make you think like you are getting a deal on your loan.
The lowest cost loan providers will not pay for your appraisal. Companies which offer to pay for loan appraisals are not only writing checks for your appraisal, but also for everyone who cancels before the loan is subsidized, meaning t hat you will not only pay your loan appraisal fees, but quite often other people’s as well! Don’t fall for the myth that you are getting a deal when you are offered a free appraisal from a lender, just go somewhere else.
