No matter if you’re buying, selling, or refinancing a house, you can know with absolute certainty that — at some point throughout the home buying process — you will have to have a home appraisal. The only problem is that, more often than you might think, the process of buying, selling, or refinancing can run longer than the actual length of the appraisal itself. If you exceed the length of time the appraisal is good for, you may have to go through the appraisal process all over again before you’re able to seal the deal.
For this reason, it’s worth knowing how long your appraisal is good for so that you can avoid having to jump through extra hoops. Likewise, for an insurance appraisal. There’s just one issue, and that’s that the question of how long an appraisal is good for doesn’t come with a simple answer. There are several factors that help determine the length an appraisal is valid for. Before getting into that, though, it’s worth defining what exactly an appraisal is and how different factors can alter them.
An appraisal is a way to ensure that the price of a home is fair and balanced and in line with the property’s market value. A home’s appraisal is determined by a real estate appraiser, who takes note of several factors to accurately estimate the value of a property. In turn, this appraisal can help ascertain what price a home is likely to go for on the housing market. An appraisal also serves insurance purposes, so that insurance agencies can accurately provide coverage and protect assets.
This differs from a home inspection, which is the much more complicated and intricate process of the two. Home inspections involve a certified inspector scouring the home high and low for specific issues in need of immediate repair before buying, selling, or refinancing. This involves checking outlets, the HVAC system, the roof, and countless other ins and outs of a home. A home appraiser takes a much simpler approach, accounting only for visible defects to the home and its structure, such as its plumbing and flooring, to determine the value of the property.
The length of a home’s appraisal depends on several factors, one of which is the real estate market at large. For example, if the market is good, then real estate appraisers can confidently assume that a home’s fair market value will not be changing very much over the course of a few months. On the other hand, if the market is volatile, then an appraisal might expire a lot faster than usual. This is because a home’s true market value could be a lot more likely to change significantly in an environment that isn’t as stable.
Another factor that can cause different appraisal lengths is the type of mortgage loan that is actually being sought. Whether the loan comes from a bank, a government agency, or a mortgage loan company will play a huge part in how long an appraisal is valid. Let’s look at some examples.
The least restrictive type of loan also happens to be the most conventional type of loan. These conventional loans typically see appraisals on new homes staying valid for up to a year, with appraisals on existing homes typically staying valid for up to 120 days or more.
The U.S. Department of Housing and Urban Development’s Federal Housing Administration (FHA) loans are like conventional loans in that their appraisals typically last 120 days. However, if the appraisal is updated before it expires, it can last as long as 240 days. However, if a new case number is assigned at any point, a new appraisal may be asked for regardless of the status or length the previous appraisal has remaining.
Loans from the U.S. Department of Veterans Affairs boast one of the longest appraisal periods, often lasting up to six months before a new appraisal is required. A new appraisal might also be asked for if the loan does not close within those six months.
If the home is in a rural area as determined by federal guidelines, then a U.S. Department of Agriculture mortgage loan can be obtained. Appraisals on these rural homes last up to 120 days and even offer a grace period of 30 days.
Mortgage loan companies go about appraisals quite differently, and this is because they provide mortgages by purchasing them from banks or lenders and then selling them to investors as a mortgage-backed security. As such, appraisals with Freddie Mac, Fannie Mae, and other mortgage loan companies are typically valid for up to 12 months at a time. A stipulation to this is that they require a follow-up appraisal after the first 120 days.
When an appraisal expires, there’s no need to worry. There are a few different ways to move forward from an expired appraisal, beginning with requesting an extension or an update to the appraisal. As long as the borrower meets the lender’s requirements, an update or an extension can often be granted with little to no hassle.
There’s also the option of Recertification of Value (ROV), which is a reassessment and verification that all necessary repairs noted on the original appraisal were completed. When an ROV is completed, then the appraisal can usually be extended or reissued without having to calculate a new value.
The only time there’s a need to worry about the expiration of an appraisal is if there’s been some sort of significant change to the home’s condition or value. Whether it be some sort of damage to the interior or exterior of the structure, a botched renovation to the home, or another form of property damage entirely, there’s a chance that an appraisal could be totally revoked — sometimes before it’s even had the chance to expire.
When all is said and done, one thing about appraisals has been made abundantly clear: appraisals often vary from lender to lender, and if you’d like to know how long your appraisal is good for, then it’s best to check directly with the lender in question. Even though an appraisal is only good for a finite amount of time, they are still an essential tool that provides a key understanding of a property’s worth to both the loan recipient and the lender alike.
If you need help to determine the length of your appraisal or find yourself with further questions about insurance appraisal in general, consider visiting LemonBrew. If you’re looking to match with a LemonBrew partner agent, you can rest easy knowing you’re speaking with an experienced and knowledgeable person who can help answer any questions you may have about the appraisal. Contact LemonBrew to learn more about how we can help you through the real estate process.