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How Long is Your Appraisal Good For?

By Mary Lamphere

One of the major steps in the loan approval process is the appraisal process as this is the way that a lender will determine whether or not a home is worth the price. If a home's appraised value comes in short of the asking price, the borrower will likely have some trouble securing a loan as the lender will find it difficult to back the loan in the event of default. Appraisals will accurately reflect the value of a home at a particular point in time and therefore, while there is no set expiration date for an appraisal, most lenders have stringent guidelines that dictate the validity of an appraisal as it ages.

Industry standard for appraisals is six months but this number differs from lender to lender. Many lenders will accept an appraisal that was performed within the past 190 days which is essentially a little bit more than 6 months while others may require a re-appraisal if the previous appraisal was performed more than a couple of months prior.

In a volatile or rapidly changing housing market, many lenders now require appraisals to be performed within 90 days of the application for a loan in order for the appraisal to be considered valid and up-to-date. As the housing market has changed and home prices have dipped rather consistently and rather rapidly, many lenders have also reduced the amount of time that they will allow to pass between a home being appraised and a loan being provided based on that appraisal.

Appraisals are estimates of the market value of a home at a specific date when the property was inspected. These values can go up, or down, from that date which is why most lenders require an appraisal to have been performed recently from the time in which a loan is to be provided. This ensures that the lender has the most accurate home value assessment and can properly fund as well as back their loan.

For certain types of loans such as FHA loans, the appraisal validity is rather set forward and does not necessarily depend so much on the lender's terms. The appraisal validity period is 120 days for an FHA loan in most cases, but this term is extended for loans that are for properties that fall in a federally Declared Major Disaster Area as long as the loan was not closed prior to the declaration of disaster in the area. In this case, the appraisal validity period may be extended from 120 days to a maximum of one year but in no case will the validity of an appraisal be good for a period of more than one year.

Ultimately, the length of time that a home appraisal is good for will depend on a variety of factors including the volatility of the housing market, the lender and the type of loan being applied for. Most conventional mortgages these days will deem an appraisal valid for not more than 6 months but these dates can be lessened or lengthened depending on individual lender discretion.

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