How Long Are Home Loan Pre-Approvals Good For?

Getting pre-approved for a home loan is an important first step when buying a house It shows sellers that you are financially ready to move forward with a purchase But pre-approvals don’t last forever. So how long are they good for?

What is a Home Loan Pre-Approval?

A pre-approval is when a lender reviews your finances and approves you for a specific mortgage amount. To get pre-approved, the lender confirms your

• Income and employment
• Credit score and history
• Assets and downpayment funds
• Liabilities and debts

After reviewing your financial info, the lender provides a pre-approval letter stating the maximum mortgage amount they will lend to you.

This pre-approval letter allows you to shop for homes within your approved price range. It shows sellers you are a serious buyer who is ready to move forward.

Why Get Pre-Approved?

Here are some key benefits of getting pre-approved before house hunting:

• Know Your Budget: The pre-approval amount helps you set a realistic home shopping budget.

• Stronger Offer: Sellers often prefer buyers who are pre-approved since their financing is secured.

• Speeds Up The Process: Much of the paperwork is done upfront, so the actual mortgage process goes faster once your offer is accepted.

• Locks in Your Rate: You can usually lock in an interest rate with your pre-approval for 60-90 days.

How Long Are Pre-Approvals Valid?

The typical validity window for a pre-approval letter is 60-90 days. But it can vary by lender.

Here’s why pre-approvals have a limited shelf life:

• Rates and Markets Change: Interest rates and home prices fluctuate constantly, affecting affordability.

• Income and Job Status Can Change: Lenders want current proof you still have a steady income source.

• Your Credit Score Can Shift: Even small score changes could alter your approval.

• Downpayment Funds Need Verifying: Lenders want up-to-date proof you still have the cash to close.

For all these reasons, most lenders make pre-approvals valid for 2-3 months.

What Happens When a Pre-Approval Expires?

Once your pre-approval letter expires, it is no longer valid. This means:

• You can no longer rely on the letter when putting in offers.

• You won’t be able to finalize the mortgage with the terms stated in the expired letter.

If you haven’t found a home yet, you will need to reapply and get a new pre-approval from your lender.

The good news is that renewing a pre-approval is usually quicker than the initial process. The lender already has most of your information.

You will just need to provide updated details on:

• Income statements
• Bank account balances
• Credit reports
• Job status
• Downpayment funds

After reviewing your refreshed financial profile, the lender can issue a new pre-approval letter. This letter will reflect your current situation – such as a higher or lower maximum loan amount.

Tips for Pre-Approval Renewal

Follow these tips to make renewing your pre-approval letter go smoothly:

• Track Expiration Dates: Note when your letter expires so you can reapply in time.

• Stay in Touch With Your Lender: Let them know if your situation changes before renewal time.

• Get New Statements Ready: Have needed documents like pay stubs, bank statements, and tax returns updated.

• Recheck Your Credit: Request current credit reports to check for new activity.

• Act Quickly If Rates Drop: If rates fall before your letter expires, move fast to lock in the lower rate.

How Far In Advance Should You Get Pre-Approved?

Timing is important when getting pre-approved. Here are some guidelines on when to apply:

• If you are just starting out, wait to apply. Only get pre-approved once you are ready to actively shop for a home.

• If you are buying soon, get pre-approved about 2-3 months before you want to start putting in offers. This ensures your letter will stay valid during the shopping process.

• If you are under contract, get pre-approved immediately so it’s lined up before closing.

Adjust your timing based on how long you expect the shopping process to take in your local market. Connect with a lender to determine the best pre-approval timeline for your situation.

Can You Get Pre-Approved Too Early?

It is possible to get pre-approved too far in advance. Here are some risks of getting pre-approved 6+ months before buying:

• Expiration: The letter could expire before you find a home.

• Changing Finances: Your income, debts, or credit could change, altering your approval.

• Locking In a High Rate: If rates fall, you won’t be able to benefit by locking in a new lower rate.

• Lengthy Process: Pre-approvals require a lot of paperwork. Going through this repeatedly gets tedious.

Unless you have a reason like an upcoming rate lock expiration, try not to get pre-approved more than 2-3 months before you plan to buy.

Pre-Approval Checklist

To make sure your pre-approval goes smoothly, have these items ready when applying:

• Two years of W2s and recent pay stubs
• Federal tax returns for 2 years
• Bank statements showing downpayment funds
• Retirement account statements
• Documentation on any supplemental income
• Photo ID
• List of all properties owned and their associated mortgages
• Copy of divorce decree or child support agreement, if applicable
• Student loan documentation with current monthly payments
• Credit card statements to show recurring monthly charges

The more complete your paperwork is upfront, the faster the pre-approval process will go.

When Does a Pre-Approval Become a Final Mortgage?

A pre-approval is not the final stage. Once your offer is accepted on a home, your pre-approval transitions into a mortgage.

During this stage, the lender will verify all your financial details and home appraisal before final approval. They will also have you sign all closing documents to finalize the mortgage.

So don’t consider yourself fully approved until you have the keys to your new home in hand! The pre-approval simply starts you on the pathway to eventual mortgage approval.

Get Pre-Approved Today!

Now that you know time limits apply, make sure you get pre-approved at the right point in your home buying journey.

Pre-approval sets you up for success by showing sellers you are serious about purchasing. And it helps you comfortably shop within your approved budget.

To find the best mortgage for your needs and get pre-approved, contact a top-rated lender today. They can guide you through the process and set you on the path to homeownership.