July 4, 2012
When buying a home with an FHA guaranteed mortgage loan, one of the most important steps in the process is the appraisal. An FHA appraiser reviews the home to make sure it lives up to minimum property requirements and assigns a fair market value to the property.
There are many common questions about FHA appraisals; here are some of them along with the answers.
How Long Is An FHA Appraisal Valid?
Buyers who purchased property prior to January 1, 2010 may have experienced a different set of standards, but currently, FHA appraisals are considered valid for 120 days. After that time they expire. According to FHA.gov, “Effective for all case numbers assigned on or after January 1, 2010 the validity period for all appraisals on existing, proposed, and under construction properties, including HUD REO appraisals that have an effective date of on or after April 1, 2010, will be 120 days.”
Are Extensions Available For The Validity Period?
FHA loan rules state, “The original appraisal may be extended by 30 days to allow for the approval of the borrower and closing the loan provided the borrower signs a valid sales contract or is approved prior to the expiration of the appraisal.”
Current policy for FHA loans with case numbers on or after February 15, 2010 also dictates that the original appraisal report should be updated only once, “via the completion of Appraisal Update Report (Fannie Mae 1004D/Freddie Mac 442), thereby capping the overall validity period for an appraisal being updated at 240 days. The update can only be completed by the original appraiser provided they are currently in good standing on the FHA Appraiser Roster.”
Can an FHA Appraisal Be Re-Used?
FHA loan rules do not permit the re-use of an appraisal once the loan has closed. According to FHA.gov, “For example, an appraisal used for the purchase of a property cannot be used again for a subsequent refinance, even if the appraisal is within the 120 day validity period. A new appraisal is required for each refinance transaction requiring an appraisal.”
Do you have a question about FHA home loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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