How Long Does a Pre-Approved Loan Last? Everything You Need To Know

Getting pre-approved for a loan is an important step when you are planning to make a major purchase like buying a house or car, But pre-approvals don’t last forever So how long does a pre-approved loan really last?

What is Loan Pre-Approval?

When you get pre-approved for a loan, the lender reviews your credit history, income, and other financial information to determine the loan amount and interest rate you qualify for.

Pre-approval is not the same as final loan approval. With pre-approval, the lender is giving you a conditional approval based on the information you provided. You will still need to go through the full loan application process later if you want the loan.

Why Get Pre-Approved?

There are a few key benefits to getting pre-approved for a loan

• It lets you know how much you can afford to spend This helps you set a realistic budget when shopping.

• It shows sellers you are a serious buyer if you are looking to purchase a home or car. Your offer will look stronger with a pre-approval letter.

• It speeds up the final loan process. Since you already went through initial approval, less documentation is needed at closing.

How Long Does Pre-Approval Last?

Unfortunately, pre-approvals do expire. Here is how long mortgage and auto loan pre-approvals typically last:

• Mortgages – 60 to 90 days
• Auto Loans – 30 to 60 days

Lenders have limits on pre-approvals because your financial situation could change after getting the initial conditional approval. For example, you might:

• Take on new debt
• Have late payments
• Change jobs
• See your income or expenses shift

Any of these factors could impact your final loan eligibility and terms. That’s why lenders want current information when they give full approval.

Some types of loans have shorter pre-approval periods than others. For example, many mortgage lenders issue 60-day pre-approvals. But some do 90 days.

Auto loan pre-approvals tend to be 30 to 60 days. The shorter time frame accounts for how quickly people’s finances and car options can change.

When to Get Pre-Approved

You don’t want to get pre-approved too far in advance since it will expire eventually. But you also don’t want to wait until the last minute.

Here are some guidelines for timing your pre-approval:

Mortgage

• 2 to 4 months before buying

This gives you enough time to shop for a home but reduces the risk of expiration before closing.

Auto Loan

• 1 to 2 months before buying

Don’t get pre-approved until you are seriously looking and have specific cars in mind. The short approval window means you need to be ready to buy soon.

How to Extend Your Pre-Approval

If your pre-approval is about to expire, you may be able to extend it. Here are some tips:

• Contact your lender – Let them know you need more time and ask about extending the pre-approval. Not all lenders allow extensions.

• Reapply – For lenders that won’t extend, you may need to go through pre-approval again. But if you reapply within 30 days, it won’t hurt your credit as much.

• Update documentation – Your lender may require new bank statements or other paperwork to refresh your application.

• Review terms – Extending a pre-approval could change the loan amount, rate, or program you qualify for. Be sure to discuss any changes.

• Act fast – Try to extend at least two weeks before expiration. Last minute requests often can’t be accommodated.

Alternatives When Pre-Approval Expires

If you can’t extend your pre-approval and it has expired, you have a couple options:

• Reapply – As mentioned above, going through pre-approval again is one choice if you still need a loan. Just beware of the credit impact.

• Shop new lenders – Consider getting pre-approved with a new lender instead. Compare offers to find the best loan program and rate.

• Delay purchase – If you aren’t ready to reapply yet, you may need to push back your home or car purchase until you are prepared.

Tips for Getting the Most from Pre-Approval

Here are a few final tips on making the most of your pre-approved loan:

• Only apply with lenders you seriously want to use. Too many inquiries can lower your credit score.

• Ask the lender upfront how long the pre-approval is good for. This avoids surprises.

• Be sure to complete the full application before your pre-approval expires.

• Save all documents used for pre-approval to make final approval faster.

• Let the lender know as soon as possible if your situation changes after getting pre-approved.

• Ask if rate locks are available to lock in an interest rate with your pre-approval.

Getting pre-approved is an important part of the lending process. Just make sure you know how long your pre-approval lasts, so you don’t let it go to waste! Careful timing and communication with lenders will help ensure your loan is ready when you need it.