You’re in the process of purchasing a home with financing, and your lender has ordered and completed an appraisal which you paid for. How long is this appraisal good for? If you don’t close fast enough, will you have to do a second appraisal?
Contrary to popular belief, appraisals for mortgages don’t have an expiration date like a carton of milk. In fact, it’s up to lenders to decide how old of an appraisal they’ll accept. This can vary based on how tight current lending standards are, as well as how rapidly market conditions are changing.
With that said, we’ll discuss in the following article how certain special types of loans such as FHA or VA loans might have more specific rules around how old an appraisal can be.
How long is a conventional appraisal good for?
There is no definitive answer to how long a conventional appraisal is good for. The longevity of an appraisal typically depends on several factors, including the individual lender’s policies, how strict the lending standards are, and how rapidly market conditions are changing. Generally speaking, a lender will accept an appraisal that is less than six months old, but this can vary depending on the lender’s policies and the specific circumstances of the loan application.
Some lenders may be more lenient with the age of an appraisal, while others may require an updated appraisal if it is more than three months old. This can also depend on the type of property being appraised, with lenders often requiring more frequent appraisals for properties that are more volatile or prone to rapid changes in value, such as commercial real estate or properties in rapidly developing areas.
The lending standards also play a role in determining the longevity of an appraisal. If lending standards are tighter, lenders may require more frequent appraisals to ensure the property’s value is accurately reflected.
Conversely, if lending standards are looser, lenders may be more willing to accept older appraisals to speed up the loan approval process.
Market conditions also influence the lifespan of an appraisal. If market conditions are relatively stable, an appraisal may remain valid for a longer period. However, if market conditions are rapidly changing, lenders may require more frequent appraisals to ensure that the property’s value is accurately reflected.
In summary, the lifespan of a conventional appraisal depends on a variety of factors, including the lender’s policies, lending standards, and market conditions. While a six-month-old appraisal is generally accepted, it is crucial to check with the lender to determine their specific requirements.
Pro Tip: What happens if you get a low appraisal? Unless you have an appraisal contingency written into your contract, you may have to proceed with the deal with a smaller loan amount. For example, if your lender has agreed to lend you 80% LTV, but the appraisal comes in lower than the contract price, then the lender will still lend 80% but only against the lower appraised value. You’d have to make up the difference with additional equity.
According to the Federal Housing Administration (FHA), an appraisal is valid for 120 days, or approximately four months, from the date of the inspection. This means that the appraisal must be completed within 120 days of the loan application date, and the lender must receive the final appraisal report before the expiration date.
If the loan does not close within the 120-day validity period, the appraisal will need to be updated, and the borrower will be responsible for the cost of the new appraisal. However, the FHA does allow for a 30-day extension of the appraisal’s validity period in certain cases, such as when the borrower experiences a delay in closing due to circumstances beyond their control.
It’s worth noting that the FHA appraisal is more thorough than a conventional appraisal and takes into account the property’s overall condition and livability. The FHA appraiser is required to inspect the property’s physical condition and ensure that it meets minimum property requirements set by the FHA, such as safety, security, and soundness.
In summary, an FHA appraisal is valid for 120 days, or approximately four months, from the date of inspection. If the loan does not close within that time frame, the appraisal must be updated, and the borrower will be responsible for the cost of the new appraisal. It’s essential to adhere to the validity period to ensure a smooth and efficient loan approval process.
In some instances, an initial home appraisal may be updated, allowing it to remain valid for a total period of up to 240 days, or approximately eight months.
This is because the Federal Housing Administration (FHA) allows for a 30-day extension of the appraisal’s initial validity period, followed by a 30-day extension of the updated appraisal.
The FHA allows for the extension of the initial appraisal’s validity period if the original appraisal was completed within the previous 210 days and there have been no changes to the property that would affect its value. The appraiser must provide a letter stating that the property’s value has not significantly changed, and the extension must be approved by the lender and the FHA.
If changes have occurred that could affect the property’s value, such as renovations or repairs, an updated appraisal may be necessary. In this case, the updated appraisal must be completed within 240 days of the original appraisal, and the lender must receive the final appraisal report before the expiration date. The updated appraisal will then be valid for 120 days, or approximately four months, from the date of the updated inspection.
It’s important to note that lenders may have their own policies regarding the validity of appraisals, and borrowers should always check with their lender to determine the specific requirements. Additionally, the extension of the validity period is not automatic and must be approved by the lender and the FHA.
In summary, an initial home appraisal may be updated, allowing it to remain valid for a total period of up to 240 days, provided that no changes have occurred that would affect the property’s value. If changes have occurred, an updated appraisal may be necessary, and the updated appraisal will be valid for 120 days from the date of the updated inspection. Borrowers should always check with their lender to determine the specific requirements regarding the validity of appraisals.
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A VA appraisal is only valid for a maximum of 180 days from the date the appraisal is completed. Unfortunately, you cannot extend the validity period of a VA appraisal beyond this 180-day limit.
If the loan does not close within the 180-day validity period, the appraisal will need to be updated, and the borrower will be responsible for the cost of the new appraisal. However, if the original appraiser is available and able to complete the updated appraisal within the 180-day validity period, the updated appraisal may be accepted by the VA without requiring a new inspection.
It’s important to note that the VA appraisal is more thorough than a conventional appraisal and assesses the property’s overall condition and livability.
The VA appraiser is required to inspect the property’s physical condition and ensure that it meets the VA’s minimum property requirements for safety, security, and soundness.
According to VAloans.com a VA appraisal is valid for a maximum of 180 days from the date the appraisal is completed, and you cannot extend the validity period beyond this limit. If the loan does not close within the 180-day period, the appraisal will need to be updated, and the borrower will be responsible for the cost of the new appraisal.
If an appraisal expires before a mortgage loan is closed, the borrower will need to get a new appraisal. The lender will require an up-to-date appraisal to make sure the value of the property has not changed since the original appraisal was done. This is because the lender will only loan money based on the value of the property, so an accurate appraisal is essential to the mortgage process.
The cost of the new appraisal will typically fall on the borrower, and it can range from a few hundred dollars to over a thousand, depending on the property’s size and location. The borrower will also need to wait for the appraiser to complete the new appraisal, which could cause delays in the loan closing process.
It’s important to note that market conditions can change quickly, and a property’s value can fluctuate over time.
As such, it’s always advisable to complete the mortgage process as soon as possible after the appraisal is completed to avoid any potential issues with the property’s value changing.
In summary, if an appraisal expires before a mortgage loan is closed, the borrower will need to get a new appraisal at their own expense. This can cause delays in the loan closing process and add additional costs to the mortgage process. Borrowers should always try to complete the mortgage process as soon as possible after the appraisal is completed to avoid any issues with the property’s value changing.
Pro Tip: If you get a low appraisal, instead of waiting for it to expire in order to get a redo (and potentially jeopardize the loan approval process), you could learn how to challenge a low appraisal in our article on appraisal rebuttals.
