How Long Is an Appraisal Good for Refinancing?

A home appraisal is a professional assessment of a property’s market value, crucial for mortgage refinancing. Lenders rely on appraisals to ensure the loan amount is supported by the collateral, the property itself. This evaluation helps assure the lender that the investment is sound and mitigates potential risks, providing an objective opinion of value.

Standard Validity Period for Refinancing Appraisals

The typical duration an appraisal is considered valid for refinancing varies, but a common industry standard for conventional loans is generally between 120 and 180 days. Fannie Mae often considers appraisals valid for up to 12 months, though an update is usually required after 120 days. This timeframe exists because property values can change, and lenders need a current assessment to ensure the loan-to-value ratio remains appropriate.

The specific validity period also depends on the loan type. FHA (Federal Housing Administration) appraisals are generally valid for 120 days, with potential extensions. VA (Department of Veterans Affairs) loan appraisals are typically valid for six months from their effective date for refinance loans. USDA (United States Department of Agriculture) loans often have a shorter initial validity period, such as 150 days at loan closing. It is important to confirm the exact requirements with your specific lender, as policies can vary.

Key Factors Influencing Appraisal Lifespan

Several elements can significantly influence how long an appraisal remains acceptable for a refinancing transaction. Rapid shifts in the housing market, known as market volatility, can quickly render an appraisal outdated. If property values are increasing or decreasing rapidly, an appraisal completed even a few months prior might not accurately reflect current market conditions.

Changes to the property’s physical condition also play a role. Major renovations or significant damage can alter a home’s value. Such alterations might necessitate a new appraisal to capture the updated valuation. Lenders typically require a new appraisal if the property has undergone substantial structural changes or improvements.

Individual mortgage lenders may also impose their own additional requirements, often referred to as “lender overlays,” on top of federal guidelines. These overlays are internal policies designed to manage risk, and they can include stricter appraisal validity periods or specific conditions under which an appraisal is accepted. For example, a lender might require a newer appraisal than the general industry standard, even if federal guidelines permit an older one.

Appraisal Updates and Re-certifications

In certain circumstances, an existing appraisal might be used beyond its initial standard validity period through an appraisal update or a re-certification of value. An appraisal update, also called a Recertification of Value (ROV), involves the original appraiser reviewing market and property conditions to confirm if the initial value is still accurate. This is a re-validation, not a complete new appraisal, typically conducted shortly after the original’s expiration.

An update is generally permissible when there have been minimal changes in the market or to the property, and often, it must be performed by the original appraiser. For conventional loans, Fannie Mae guidelines allow an appraisal update if the original report is more than four months but less than 12 months old, provided the appraiser inspects the exterior and reviews current market data. This process can offer cost and time savings compared to commissioning a brand-new appraisal.

However, appraisal updates or re-certifications are not always an option. Their availability depends on the specific lender’s policies, the age of the original appraisal, and the extent of market fluctuations. FHA appraisals can be updated to extend their validity up to 240 days from the original effective date, but this is a one-time update. A re-certification of value typically confirms that specific conditions, such as completed repairs, have been met, rather than providing a new valuation.

When a New Appraisal Becomes Necessary

A new appraisal will be required in several scenarios, even if updates were previously possible. The most straightforward situation is when the appraisal is simply too old, falling outside the permissible window for updates or re-certification. For instance, a conventional appraisal exceeding 12 months from the note date typically mandates a new one.

Significant changes in the housing market since the original appraisal date also necessitate a new valuation. If the market has experienced substantial appreciation or depreciation, the previous appraisal’s valuation would no longer be considered reliable for the lender’s risk assessment.

Any major alterations to the property, such as substantial structural changes, additions, or significant damage, will also trigger the need for a new appraisal. The original appraisal would not account for these changes, requiring a new assessment to reflect the property’s current condition.

Switching lenders during the refinancing process will almost always require a new appraisal, as each lender has its own underwriting guidelines. Additionally, if a borrower changes the type of loan being pursued (e.g., from a conventional loan to an FHA or VA loan), a new appraisal specific to that program’s requirements will likely be necessary.