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How Long Do Home Appraisals Last and What to Do If They Expire: Guide

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11:23

Hi Phil and Ryan,

I'm buying my first house and feeling swamped with all the loan options out there, like FHA, VA, and more. Each one has different rules about home appraisals.

I'm trying to figure out how long these appraisals last, what I need to do if they expire, and if I can even use the same appraisal if I switch to a different loan. Plus, I heard something about being able to extend the time an appraisal is good for, but it's all a bit fuzzy.

Can you simplify all this for me? I just want to understand the basics of how appraisals work with different loans without getting bogged down by too much technical talk.

Andrew S.


Expert Answer: Hi Andrew, let's simplify everything and break it down step by step for you.




How Long Your Appraisal Lasts for Conventional Mortgages

For conventional mortgages, your home appraisal typically has a validity period of up to 12 months. However, if the appraisal is more than 120 days old by the note date, a reinspection of the property is required.

If your conventional mortgage appraisal is older than 120 days by the note date, you'll need to have the property reinspected. This reinspection confirms the home's condition and value hasn't changed since the original appraisal.

The re-inspection results are documented on specific forms (Form 1004D for Fannie Mae or Form 442 for Freddie Mac), which are then reviewed by your lender to ensure the property still meets their lending criteria.


A professional appraiser actively evaluating a property


When Do FHA Appraisals Expire and What's Next

An FHA appraisal is valid for 180 days from the effective date of the appraisal report. If your loan disbursement occurs after this period, an appraisal update may be required to extend its validity to one year.

To update an FHA appraisal and extend its validity beyond the initial 180 days, the update must be conducted by the same appraiser who performed the original appraisal, if possible.

This update is essentially a shorter version of the initial appraisal, focusing on confirming whether the property's condition and market value have remained stable or if any significant changes have occurred.

If the update affirms the property’s value and condition are unchanged, the appraisal's validity can be extended up to a full year from the initial appraisal date.

This process allows for the continuation of the loan approval and closing process without the need for a completely new appraisal, streamlining the mortgage journey for buyers.


When Do VA Appraisals Expire and What's Next

A VA appraisal has a validity period of six months from the issuance date of the Notice of Value (NOV). If you are under contract during this period, the VA allows the transaction to proceed to completion or termination within this timeframe.

Should your home purchase process extend beyond the six-month validity period of the appraisal, and you still wish to proceed with the VA loan, you may request an extension of the appraisal's validity.

Such requests are considered on a case-by-case basis, taking into account the prevailing conditions and the specifics of your transaction.

If granted, this extension can provide additional time to finalize your home purchase without the need for a new appraisal, facilitating a smoother closing process under VA loan guidelines.

To request an extension for a VA appraisal, you should initially reach out to your VA loan officer or the lender processing your VA loan application. They are best equipped to guide you through the process, as it involves specific VA guidelines and paperwork.

Your lender will liaise with the VA on your behalf or direct you to the appropriate VA contact to submit your extension request, ensuring that all necessary criteria are met to consider extending your appraisal's validity.


When Do USDA Appraisals Expire and What's Next

If a USDA appraisal expires, which typically happens 180 days after the effective date of the appraisal report, and you have not yet closed on your home purchase, you may need to obtain an updated appraisal or a new appraisal report.

This requirement ensures the property still aligns with USDA standards and the loan amount is appropriate for the home's current market value.

However, USDA does not have a standardized process for extending appraisal validity as the FHA or VA might. Therefore, if you find yourself in a situation where your appraisal is nearing expiration or has expired, it's crucial to communicate with your lender immediately.

They can guide you through the necessary steps, which could involve requesting an updated assessment or starting the appraisal process anew to meet USDA loan requirements and proceed with your home purchase.


So Which Mortgage Appraisal Lasts The Longest / Is The Best?

Determining which mortgage appraisal lasts the longest or is the "best" depends on the context of your home-buying process and the specific requirements of your loan program.

Here's a brief overview:


Conventional Mortgages Review

Appraisals generally have a validity of up to 12 months, with a reinspection required if the appraisal is older than 120 days at the note date.

This flexibility can be advantageous for buyers in stable or slowly appreciating markets.


FHA Loans Review

Appraisals are valid for 180 days, with the possibility of extending the validity up to one year through an appraisal update.

This process can benefit buyers who might face delays in their purchasing process.


VA Loans Review

With an appraisal validity of six months, VA appraisals are geared towards accommodating the unique circumstances of veterans.

The VA's willingness to consider extensions on a case-by-case basis can offer additional flexibility in fluctuating markets or when unexpected delays occur.


USDA Loans Review

Similar to FHA and VA loans, USDA appraisals also cater to specific borrower groups, offering flexibility with extensions in certain situations.


The "best" appraisal type depends on your situation, including how quickly you plan to close, market conditions, and the specific requirements of your mortgage program.

For example, in a rapidly changing market, the shorter validity period of FHA and VA appraisals could ensure more current property valuations, offering a form of protection to the buyer.

In contrast, the longer initial validity period of conventional mortgage appraisals may reduce the need for updates or extensions, potentially streamlining the buying process in stable markets.


Are Appraisals Reusable for Other Buyers?

Appraisals are generally specific to a particular loan application and are not reusable for other buyers in most cases. This specificity is due to the appraisal being linked to the borrower's loan file and underwriting process.

However, there are nuanced exceptions depending on the type of loan:

FHA appraisals are attached to the property for the validity period of the appraisal (180 days). If another buyer is also using FHA financing within this period, the existing appraisal can be used. This scenario is relatively rare, as it requires specific timing and financing conditions to align.

VA appraisals are uniquely tied to the veteran who ordered the appraisal. If another veteran wishes to purchase the same property and use VA financing, a new appraisal must be ordered. The appraisal cannot be transferred to another buyer, even if they are also eligible for VA loan benefits.

Similar to FHA and VA loans, USDA appraisals are conducted for the specific loan application and are generally not transferable to other buyers.


Additional Home Appraisal FAQs

To further assist you in navigating the complexities of home appraisals across various mortgage types, we've compiled a list of frequently asked questions.

These aim to provide deeper insights into scenarios that homebuyers commonly encounter but haven't been explicitly covered in the article.


Can I challenge an appraisal if it comes in too low?

Yes, if an appraisal comes in lower than expected, both buyers and sellers have the option to challenge it. This involves providing additional information, such as recent comparable sales that the appraiser might have missed, to the lender.

The lender can then request a review or a new appraisal if justified.


Does the type of loan affect the appraisal process?

The loan type can influence the appraisal process, particularly regarding the property standards each program requires.

For example, FHA and VA loans have specific safety, security, and soundness criteria that might not be as stringent for conventional loans.


What happens if an appraisal is delayed?

Appraisal delays can affect the closing timeline of your home purchase. It's important to communicate with your lender and real estate agent to manage any potential impact. Lenders may offer extensions on rate locks or adjust closing dates to accommodate delays.


Are there any scenarios where an appraisal might not be required?

In certain situations, such as a refinance with a high equity position or a purchase with a substantial down payment, lenders might waive the appraisal requirement. This is more common with conventional loans than with government-backed loans.


How do I know if my property will pass a VA or FHA appraisal?

Properties financed with VA or FHA loans must meet specific standards related to health, safety, and structural integrity. It's advisable to review these criteria in advance and address any potential issues before the appraisal.


Can I use a previous appraisal for refinancing?

Typically, you cannot use a previous appraisal for refinancing. Lenders will require a new appraisal as part of the underwriting process for the refinance to ensure the loan amount is appropriate for the current market value of the property.


What's the difference between an appraisal and a home inspection?

An appraisal determines the market value of a home for the lender, while a home inspection assesses the condition of the home for the buyer. Both are important, but they serve different purposes in the homebuying process.


How can I prepare my home for an appraisal?

Enhancing curb appeal, making minor repairs, and ensuring the home is clean and tidy can positively influence an appraisal. Providing a list of recent upgrades or improvements to the appraiser can also be helpful.


What factors do appraisers consider when determining a home's value?

Appraisers evaluate a variety of factors, including the home's location, size, condition, and recent comparable sales in the area. They also consider the current real estate market trends in the valuation.


Can I hire my own appraiser?

While you can hire your own appraiser for a personal valuation, lenders will require an appraisal from a professional who is specifically approved and commissioned by them to ensure impartiality and adherence to their underwriting standards.

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