It’s common practice to order a VA appraisal for your VA loan, especially if you are buying a home. The only time you wouldn’t need an appraisal with a VA loan is if you are using the VA Interest Rate Reduction Refinance Loan. For purposes of this article, though, we’ll look at the purchase loan and assume you need an appraisal.
Generally speaking, the VA allows the use of the same appraisal for six months. After that time, the appraisal expires. However, if you close on a loan in between that time, the appraisal automatically expires. In other words, you cannot use it for another loan.
Why Would a VA Appraisal Expire?
The VA appraisal gives you a snapshot value of your home right now. It considers the condition of the home, its location, and the value of the comparables around it. A lot of those factors can change in the matter of six months, which is why the appraisal is only good for that amount of time.
Within the six-month period, it is very possible that the market changed. There could have been an influx of foreclosures or there could have been a large number of high priced sales. A new appraisal would take all of this into consideration. Of course, the foreclosures would bring a home’s value down while the higher sales prices would bring a sales price up.
Do VA Loans Actually Take Longer than Six Months?
This is likely the bigger question here. If you have a VA appraisal done, why wouldn’t the loan close before that six-month mark? There are many reasons this could happen, but the most common include:
- An issue with the home’s condition that won’t allow the home to pass the VA appraisal
- An issue with the seller dragging his feet
- An issue with your financing aside from the appraisal
VA loans, in general, do not take more than a month or so. It depends on the seller’s cooperation and the lender’s workload. If everything falls into place, you can close the loan rather quickly. The VA actually has nothing to do with how long it takes; it’s all on the lender.
When you shop around for different lenders, try to find out the workload they have and the turnaround time they promote. If it’s more than four weeks, you may want to look elsewhere, especially if you have a contracted closing date in your purchase contract.
Dealing With an Expired Appraisal
You probably wonder what happens if the worst-case scenario occurs and your appraisal expires. What will the lender do? In most cases, you will have to pay for another appraisal. Of course, you can fight the cost of the appraisal with the lender, especially if the delay was not due to anything that you did or didn’t do. If it was the seller’s fault, you could also negotiate the cost with the seller.
The bottom line is that you have 180 days to get your VA loan closed after doing the VA appraisal. That’s a long time, probably longer than most lenders and borrowers need. If you notice you are getting close to that mark, it’s time to talk to the lender to see the loan’s status. If it does come down to needing a new appraisal, prepare yourself for the entire loan to be underwritten again. If the value changes drastically, it could affect your ability to secure the financing you need.
Being proactive about the situation and making sure your loan closes as close as possible after the appraisal is done is the best way to make the most of your situation.