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How Long Is My Appraisal Good For?

By Tabitha Naylor

The home buying process consists on many steps. The home appraisal is a vital step in the loan approval process. The appraisal is required to determine whether the home you are trying to buy is worth the purchase price of the home. If the home appraisal comes in under the sales price of the home the lender may not approve the mortgage loan because it would make it more difficult for the lender to recoup the loan balance if the loan goes into default.

A thorough home appraisal that lenders can rely on must reflect the real estate market at the time of the sale. This means appraisals should be done as close to the time of the sale as possible and they should include the most recent data available.

Time Frame

Most lenders require comparable house sales (comps) information no older than six months so that they have a realistic picture of the real estate market around the appraised property. It is important that appraisals use comps that do not require a lot of adjustment to match them to the home being appraised. This means comps may be extended up to a year although most lenders will want comps under six months of age. This means an appraisal is generally good between three and six months from the date on the appraisal although technically, appraisals do not have an expiration date.

Exceptions

Lenders may require appraisals that are less than six months old in markets where prices are increasing or decreasing quickly. It is especially important to lenders in areas where prices are declining rapidly because if they make a loan for a higher value and home prices continue to drop they cannot be assured of recouping the balance of the loan. In these situations they may request an appraisal within 2-4 months of the proposed closing date.

FHA Appraisals

FHA loans have changed their appraisal period because of the heavy number of short sales and foreclosures they experienced after the real estate market crash of the late 2000s. After January of 2010 the regulations changed to reflect the changing market conditions. Now FHA Appraisals are subject to a term of 120 days. Appraisals older than that are not acceptable. The FHA also reserves the right to tighten or shorten the appraisal validity term in areas where market values are declining rapidly.

Summary

Although appraisals are generally not subject to an expiration date, most relators and lenders agree that appraisals should be no older than six months depending on the type of mortgage loan. For FHA loans, appraisals must be less than 120 days old in order to be used. The best rule of thumb to use with appraisals is to make sure the appraisal is no more than three months old so that it is using the most current comps and information available. Always check with your lender and engage the assistance of your realtor to ensure you receive a valid appraisal that is done within the correct timeframe.

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