Most preapprovals are good for 90 days, but some lenders issue 60-day and 30-day limits. Best practice is to get preapproved for a mortgage just before you begin serious house hunting.
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When a lender issues a mortgage preapproval letter, the document will indicate that it is only valid for a limited period of time. Most lenders issue 90-day preapprovals, but each lender sets its own time limit, and letters with 60-day and 30-day limits are issued as well.
Because preapprovals have relatively short shelf lives, its wise to time your preapproval applications carefully so you can use them effectively. Its also important to know how long a preapproval will last before you apply. Heres an overview of how to apply for a preapproval and how to use it efficiently.
Getting approved for a loan can be an exciting yet stressful process. You’ve done all the paperwork, waited impatiently, and finally received the news that your loan application was approved! But then the question arises – how long will this approval last?
Why Do Loan Approvals Expire?
Lenders set an expiration date on loan approvals because your financial situation can change over time. When you first apply and get approved, the lender evaluates your finances – income, debts, assets, credit score – at that point in time. But in the following weeks or months, circumstances could change that may impact your ability to repay the loan.
For instance, you could:
- Lose your job or source of income
- Take on additional debt
- Make a major purchase that drains your savings
- Have a change in marital status
- Have a drop in your credit score
Lenders are aware situations can change, so they put a time limit on loan approvals to recheck a borrower’s finances right before finalizing the loan.
How Long Do Different Loan Approvals Last?
Loan approvals generally last between 30 to 90 days. However, each lender sets their own expiration window. Here are some common timeframes:
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Mortgage preapprovals – Typically 60 to 90 days. Once expired you’ll need to reapply and provide updated financial paperwork.
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Auto loans – Often 30 days. You’ll have to get reapproved if you don’t finalize the loan in that timeframe.
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Personal loans – May last 60 days. Approvals for personal loans tend to be shorter since underwriting is less rigorous.
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Business loans – From 45 to 90 days depending on the lender. Timeframes for business loan approvals tend to be a bit longer.
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Credit cards – Usually around 60 days. If you wait too long to activate the card, you’ll have to reapply.
Can I Extend My Loan Approval?
In some cases, yes. If your loan approval is nearing expiration or recently expired, reach out to your lender. Let them know you still plan to move forward with the loan, but will need a bit more time.
Many lenders will grant extensions, but may ask for updated financial information or documents first. This allows them to verify your situation hasn’t changed.
Extensions are commonly granted for:
- Mortgage loans – May get another 30 to 60 days
- Auto loans – Typically can extend 15 to 30 days
- Personal loans – Additional 30 days often allowed
However, there is no guarantee a lender will extend an expired approval. And they likely won’t extend more than once. So try to finalize loans within the original timeline if possible.
What If My Loan Approval Expires?
If your loan approval expires before you finalize and fund the loan, you unfortunately have to go back to square one and reapply.
Here’s what you can expect if your approval lapses:
Mortgages – You’ll have to resubmit a full application and documentation to get a new preapproval letter. Rates and fees may differ from your initial approval.
Auto Loans – The dealer will most likely ask you to reapply and obtain a new approval letter from the lender. This restarts the buying process.
Personal Loans – Reapplying means undergoing another credit check and filling out a new loan application. Your offer may change.
Credit Cards – You’ll have to completely reapply if approved but never activated the card before expiration. This can impact your credit score again.
Business Loans – Plan to provide updated financial statements and paperwork to obtain a new approval letter. Rates and terms may be different.
The takeaway? Try your best to stick to the loan approval timeline and finalize borrowing before it expires. This saves the headache of starting over.
Tips for Finalizing Loans Before Expiration
To avoid having your loan approval lapse, follow these tips:
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Understand approval expiration timeframes – Ask upfront how long your specific approval will last so you know the deadline.
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Allow time for processing – Be sure to account for loan closing and funding timelines, not just the approval duration.
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Get preapprovals early – Don’t wait until you’ve found a house, car, etc. to apply. Give yourself a 60-90 day cushion.
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Stay organized – Keep all documents needed to close the loan handy so you can move quickly once approved.
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Communicate about delays – Keep your lender or loan officer updated if you get held up finalizing the loan to discuss extensions.
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Watch for changes – Avoid major financial moves during the approval period that could upend your eligibility.
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Consider rate locks – Ask about locking your rate so it doesn’t rise during the approval window. Fees may apply.
Following these tips will help you dodge the headache of having your loan approval expire. You worked hard to get approved – so don’t let that diligence go to waste! Monitor deadlines closely and be proactive communicating with lenders so you can finalize borrowing on time.
Gather Your Financial Information
Gathering your financial documents—including those related to employment, income and assets—can help your application process go smoothly. Documents lenders typically require include the following:
- Personal information: Youll need to provide your drivers license, passport or other proof of identity. You dont need to be a U.S. citizen to apply for a mortgage. You are eligible for a mortgage as a foreign national if you can prove your residency status.
- Income information: Be prepared to submit recent pay stubs, account statements and your past two annual tax returns.
- Asset and debt information: Youll need to provide your lender with account statements that show your savings, investments, property and other assets. Conversely, your lender will want to see your current credit card, loan and other debt balances. Ultimately, lenders want to see that you have the financial means to cover the mortgage down payment and to help you afford your loan payments if there is a change in your job or income.
How Soon Should I Get Preapproved for a Mortgage?
Its generally best to get a preapproval letter before you begin to look at homes seriously. The preapproval can help you understand how much home you can afford and may give you a competitive edge if multiple buyers submit offers on a home. If youre not sure if youre ready, a loan officer can do an informal review of your finances and credit and provide guidance of any steps you may need to take before proceeding.
But remember, most preapprovals only last up to three months, so you dont want to get one too early. The last thing you want is to have your preapproval expire before youve found your ideal home. Before applying for a mortgage preapproval, get ready to buy a home by researching the market you want to live in, enlisting the services of a real estate agent and taking steps to spruce up your credit profile before seeking a mortgage.
Waiting too long to get a preapproval, however, could leave you at a disadvantage in a competitive market. For example, you could find the perfect home, but another buyer could snatch it up while youre waiting for the lender to review your preapproval application. As such, getting a preapproval just before you begin actively looking at homes may be your best option.
How long does it take to get your Mortgage Approved?
FAQ
How long is a loan approval good for?
Does loan approval expire?
Do pre-approvals hurt your credit?
How long are approvals good for?
How long does a mortgage preapproval last?
Depending on the lender, your credit and other factors, your mortgage preapproval will likely be good for about 2 – 3 months. Let’s take a look at what a mortgage preapproval is, how long the process takes and how long your mortgage preapproval will typically last. What Is A Mortgage Preapproval?
How long does a pre-approval letter last?
Getting a pre-approval letter is the crucial first step to house hunting. You can’t make an offer on a home without one. But once you’ve gone through the process, how long does pre-approval for a mortgage last? That depends on the lender. Some mortgage companies will honor a pre-approval letter for up to 90 days. Some, as few as 30.
How long is a preapproved loan valid?
In most cases, it’s valid for around 60 – 90 days. Your financial situation can change substantially within a few months, and many lenders require you to get preapproved again if you’ve gone beyond the 90-day mark. It can, however, be a good thing for a borrower’s financial situation to change.
Do mortgage pre-approval letters expire?
When you begin shopping for a home, having a mortgage pre-approval letter can demonstrate that you’re a serious buyer. It shows sellers that a lender has determined that you are likely to be approved for a home loan based on your finances. But mortgage pre-approval letters do have an expiration date, which will vary by lender.