April 22, 2014
One common question about FHA loans involves the length of time an appraisal is valid. How much time before a current appraisal expires on the property you want to purchase with an FHA mortgage loan?
According to FHA loan rules, “The validity period for all appraisals on existing, proposed and under construction properties is 120 days.” That is found in HUD 4155.2 Chapter Four, which also adds some instructions to the lender about when the appraisal is considered valid–the actual starting date for the validity period:
“The term of the appraisal begins on the day the home is inspected by the FHA-approved appraiser and this date appears on the URAR.”
The existence of these rules begs an important question. Can an FHA borrower refinance with an “appraisal required” FHA refinancing loan package and re-use the same appraisal if the loan application is submitted and approved before the expiration date of the current appraisal?
HUD 4155.2 Chapter Four says the answer is no. “Appraisals cannot be reused after the mortgage for which the appraisal was ordered has closed. A new appraisal is required for each refinance transaction requiring an appraisal.”To clarify, HUD 4155.2 Chapter Four provides an example. “An appraisal used for the purchase of a property cannot be used again for a subsequent refinance, even if six months has not passed.”
But what about in situations where the borrower is applying for a new purchase FHA loan but needs more time because the sales contract or loan is approved but the loan won’t close before the expiration of the current appraisal? From Chapter Four:
“If a borrower signs a valid sales contract or is approved for a loan prior to the expiration date of the appraisal, the term of the appraisal may be extended, at the option of the lender, for 30 days to allow for the approval of the borrower and closing of the loan.”
As you can see from this, you may be permitted to get extra time if the lender approves–it’s best to discuss this contingency with your loan officer before you need to learn whether or not the exception will be granted.
Do you have questions about FHA home loans? Ask us in the comments section. You can get information about applying or getting pre-approved for an FHA loan at FHA.com, a private company and not a government website.
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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