The 3% limitation must be a state issue, but you will disclose the appraisal fee in Block 3 and a credit in Block 2 on the GFE and the fee will also have to go on Line 804 of the HUD. Or instead of showing a credit in Block 2 you could show a credit in the 200 series of the HUD.
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The opinions expressed are mine and they are not to be taken as legal advice.