August 18, 2014
A reader asks, “Our home was on the market, the buyer got an FHA Appraisal, their financing fell through yesterday, the appraisal was done last week, Will the new buyer who is FHA also have to get a new appraisal or can the first one be used since it has only been two weeks?”
FHA loan rules covering appraisals are found in HUD 4155.1, which states:
“FHA appraisals on existing properties are valid for six months. However, appraisals cannot be reused
–during the six month validity period once the mortgage for which the appraisal was ordered has closed, or
–for a subsequent refinance, even if six months have not passed.”
Re-use of an FHA appraisal is specifically addressed in the FHA loan rulebook when it comes to refinance loans:
“A new appraisal is required for each refinance transaction requiring an appraisal.”
So while an existing appraisal that is still valid on a home on the market may be good for six months, once the mortgage loan has closed on that property, a new appraisal would be required for any “with appraisal” FHA loan transaction.
It’s important to know that borrowers cannot be charged an appraisal fee if a valid appraisal is re-used. If the original loan applicant decides to pull out of the deal and a new borrower is permitted to use the appraisal, he or she cannot be charged for that–an appraisal is a service rendered, and the fee has already been paid.
Should the lender choose to require a new appraisal, the applicant would be required to pay for the service rendered.
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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