A mortgage lender will rely on an appraisal report to determine whether the property you intend to buy constitutes sufficient collateral to secure the mortgage transaction. During the underwriting process, lenders evaluate the age and date of appraisal reports to help them determine the credibility of the reports and the accuracy of the information provided in the reports.
Maximum Age of Appraisal Reports
When you apply for a mortgage loan, the loan officer will go through all of the documents that you submit to ascertain whether each document is acceptable for review. Many lenders will accept an appraisal report when the date of the report is within 120 days of the date you submit the mortgage application, although some lenders may require the maximum age of the appraisal report to be 90 days or less. If you are applying for a mortgage through one of the federal housing programs, such as FHA mortgage loans or VA loans, the lender will accept all documents that comply with the requirements of the programs.
If you enter into a sales contract to purchase a home before applying for a mortgage loan, some lenders may require the date of the appraisal report to be at some point after the sales contract was written. The lender may also set a maximum limit for the age of the appraisal report and require the report to be written after the sales contract.
Quality of Appraisal Report
Underwriters will evaluate the appraisal report and make note of any inaccuracies and inconsistencies regarding the current market value of the property. The age of the report is an important factor, especially if the property is located in a declining market. In declining markets, the market value of homes in the area and the value of the neighborhood as a whole may change overtime. For example, an appraisal report that is more than 120 days old may not reflect an accurate evaluation of the current market value of the property if it’s located in a declining housing market.
The appraiser’s opinion of the home’s market value should be verified with additional supporting documents. These documents must be accurate and support the appraiser’s opinion of the current value of the property. Mortgage underwriters rely on the supporting documents to get an accurate depiction of the home and its location. Typically, lenders will accept recent photos of the home. The age of the photos is also an important consideration when lenders decide whether the documents are accurate. Additional supporting documents should indicate the values of comparable homes in the neighborhood, the sales history of the home and maps to describe the location of the property.
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