How Long Is a Home Appraisal Good For?

A home appraisal is a professional, unbiased estimate of a property’s market value. This valuation is typically conducted by a licensed appraiser for various financial transactions, including mortgage lending, property sales, and refinancing. Its primary purpose is to provide lenders with assurance that the property’s value supports the loan amount, thereby mitigating risk for the financial institution. The appraisal process involves a thorough inspection of the property, analysis of comparable sales, and consideration of local market conditions.

Standard Validity Periods

The timeframe for which a home appraisal is considered current depends on the requirements of the lending institution and the secondary mortgage market. For most conventional loans, Fannie Mae and Freddie Mac generally require appraisals to be no older than 120 days from the loan’s note date. Government-backed loans through the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) typically require validity periods of 120 days (FHA) and 180 days (VA), though extensions are possible.

This period is not a legal expiration date, but a standard adopted by lenders to ensure the property’s value remains current in a fluctuating market. The goal is to provide a reliable snapshot of the market value close to the loan’s closing date. Different lenders or specific loan products may have varied internal policies regarding this timeframe, some opting for a stricter 90-day limit.

Property values, especially in dynamic markets, can change significantly over a few months. Lenders require a relatively recent appraisal to protect their investment and ensure the loan-to-value ratio remains appropriate.

Factors Affecting Validity

Several factors can influence how long an appraisal remains a reliable indicator of a property’s market value, potentially shortening its effective lifespan. Rapid shifts in the real estate market, characterized by significant price increases or decreases, can quickly render an older appraisal less accurate. In highly volatile markets, where property values can fluctuate significantly, an appraisal even 60 days old might be deemed outdated by a lender.

Changes to the property’s physical condition after the appraisal date impact its relevance. Major damage, such as from a natural disaster, or significant improvements like a room addition or a complete renovation, necessitate a re-evaluation of the property’s worth.

Lender or loan program requirements also affect an appraisal’s usability. Some lenders may have more stringent policies, demanding a more recent appraisal than the standard 120-day period. Conversely, in very stable markets with minimal price movement, some lenders might accept an appraisal that is slightly older.

Regulatory changes within the housing and lending industries can also impact appraisal validity. Broad shifts in governmental or industry guidelines concerning valuation standards or risk assessment could prompt new requirements for appraisal recency. Different appraisal types, such as a full appraisal versus a desktop appraisal, might also have varying considerations for how their results are accepted over time.

Addressing Expired Appraisals

When an appraisal’s validity period, as defined by a lender, has passed, the lender can no longer rely on it for a new loan transaction. A fresh assessment of the property’s value is then needed to proceed with financing. The primary solutions for an “expired” appraisal are either an appraisal update or a completely new appraisal.

An appraisal update, or “re-certification of value,” is a limited-scope service performed by the original appraiser. It confirms if the original estimated value is still accurate or requires adjustment based on current market conditions. Updates are typically permissible within six months of the original report, provided no significant changes to the property or market have occurred. The cost for an appraisal update is generally lower ($100-$300) and it can be completed more quickly than a full appraisal.

However, a completely new appraisal becomes necessary under several circumstances. It is required if a substantial amount of time has passed since the original appraisal, if the property has undergone major alterations, or if market conditions have shifted dramatically. A new appraisal is also needed if the loan application is submitted to a different lender or if the original appraiser is unavailable. New appraisals cost $400-$600 or more, depending on complexity and location, and involve a full re-evaluation.