Knowing how long an appraisal is good for can help you strategize your homebuying or refinance plans.
Knowing how long an appraisal is good for is important for a number of reasons. The appraisal is a key factor in qualifying for your mortgage loan since your lender cannot approve you to borrow more than the home is worth.
But the appraisal also matters if you choose to refinance your home loan. That can happen if interest rates decline and you want to take advantage of lower rates. Another option is a cash-out refinance, in which you borrow against the equity in your home.
In any of these cases, it’s crucial to know the home’s appraised value and how long an appraisal is good for.
What is an appraisal?
An appraisal is an unbiased assessment by a third-party professional that determines a home’s value at a particular moment in time. Appraisals are usually required by a buyer’s mortgage lender for a purchase loan or by an owner’s lender for a refinance loan. The goal of the appraisal is to make sure that the property is sufficient collateral for the loan – in other words, that the home is worth the amount the lender is approving you to borrow.
“However, an individual may request and pay for an appraisal independently, even if they are not pursuing loan financing or refinancing,” says Brad Cummins, principal agent and owner of Insurance Geek.
The typical cost of a home appraisal for a single-family residence is between $313 and $420, according to HomeAdvisor. However, appraisals can cost $500 or more, depending where you live and the type of property you own or plan to buy. The appraisal cost is almost always paid for by the borrower, not the seller or lender.
“You can get as many different appraisals as you want on a home, as long as you’re willing to pay for each one,” explains Evan Rosenblum, a REALTOR® with JMG Realty. “Appraisals can be computed using various calculations and approaches, but the ultimate objective is the same: The appraiser gives his or her assessment on the current market value of a property at the time the report is produced.”
“Another justification for an appraisal is during probate or transference of inherited property; it shows the government the value of a home or other property that was inherited for tax purposes,” adds Rosenblum.
How long is an appraisal good for once the report is issued?
Whether you are purchasing or refinancing, “a standard home appraisal is usually good for 90 days or less, depending on the type of loan you are applying for and the overall housing market,” notes Jason Gelios, a REALTOR® in Southeast Michigan.
Appraisals don’t expire by any universal standard. However, lenders may refuse to accept the value in an appraisal report if they believe the appraisal is outdated. The standard shelf life of an appraisal is three to six months, according to Investopedia, but that’s not a hard and fast rule. In fast-moving markets in which home values are changing rapidly, lenders may require an updated appraisal after 30 days.
Once an appraisal expires, you can opt to pay for a new appraisal, request an appraisal extension, or even back out of the deal, depending on the terms of your contract.
How long before appraisals expire with Conventional, FHA, VA, and USDA loans?
Each loan type has different appraisal expiration dates to be mindful of:
- Conventional loans: 120 days on an existing home; up to one year on a new construction property. Note that Fannie Mae loan appraisals may be valid for up to 12 months, but they require an update after four months.
- FHA loans: 120 days. If updated, up to 240 days.
- VA loans: Six months. The appraisal expires once the loan is closed.
- USDA loans: 120 days, plus a 30-day grace period for a maximum of 150 days.
What factors can affect the appraisal and how long it is good for?
Particular factors can influence how long a standard appraisal remains valid and acceptable. These include the type of loan being applied for and the overall housing market.
“If the market starts to change, a new appraisal will be needed. This is because the demand for homes may be higher or lower than the amount available, and the market is adjusting in response,” notes Cummins.
If, for example, a natural disaster occurs in the area where the home has been appraised and property values in the neighborhood plummet, the lender will want a fresh appraisal conducted.
“A hot market can affect home buyers and sellers by impacting appraisals, too, often causing them to come in lower than anticipated. If you have a hot seller’s market and the appraisal comes in for less than desired, the seller may expect the buyer to come up with the difference in cash,” notes Gelios. “With the hyperactive market we’ve observed over the past two to three years, buyers have been offering appraisal waivers with their offers to gain the seller’s attention. This means that if the appraisal comes in for less than the offer price, the buyer would guarantee to cover the difference.”
What is an appraisal extension or recertification of value and when do you need one?
If your lender determines that the appraisal has expired, you can request an appraisal extension or recertification of value at no extra cost to you. The extension is essentially an updated version of the original appraisal that ensures that your home’s value has not significantly decreased.
“A recertification of value is simply a confirmation that the home is worth what it was valued at when the home was originally appraised and that all proper conditions were met,” Gelios says.
Recertification of value can confirm the original value valuation provided and can help ensure that updates or repairs recommended by the appraiser have been completed as well.
How long is an appraisal good for? FAQs
Does an appraisal expire?
Appraisals don’t actually have a specified expiration. Instead, a lender may refuse to accept an appraisal as valid if it determines that too much time has passed since the appraisal report was completed. Experts say most appraisals last up to 90 days, although depending on the loan type and the lender, many appraisals are accepted for four to 12 months.
How often can a house be appraised?
You can pay to have your home appraised as often as you’d like, even if you are not planning to purchase a home or refinance one, although each appraisal can cost a few hundred dollars. It can be smart to have your home appraised every few years so that you can determine its true worth, which can be helpful when deciding which improvements to make, how much equity you’ve accrued and can tap into, and how much you may want to increase or decrease your homeowner's insurance coverage to be properly protected.
The bottom line on how long an appraisal is good for
The shelf life of an appraisal can last longer than you think, especially if prevailing factors and market conditions remain favorable. Just be prepared to possibly shell out more money for a second appraisal if too much time passes for the lender’s comfort.
“Fortunately, you can expect some appraisals to be waived on certain refinance deals, especially if you are refinancing with your current lender or if you make a significant down payment on a home,” Gelios says. “I’ve seen buyers who put down 20% or more have the lender waive the appraisal because its risk was lower.”
Talk to your lender about their guidelines and any opportunities for negotiating the appraisal or appraisal cost.
The information in this article contains personal opinions and may not entirely represent those of Fairway Independent Mortgage Corporation NMLS#2289.
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