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 pre-approved for a mortgage is one of the first steps many homebuyers take when starting their homebuying journey. A mortgage pre-approval provides an estimate of the loan amount you may qualify for, allowing you to shop for homes within your likely price range. But pre-approvals aren’t necessarily valid indefinitely. If you receive a pre-approval and don’t end up buying right away, you may be wondering – how long is a pre-approved loan good for?
In this comprehensive guide, we’ll cover everything you need to know about mortgage pre-approvals, including:
- What is mortgage pre-approval and how does it work?
- Why get pre-approved for a mortgage?
- How long are mortgage pre-approvals valid for?
- What factors affect the validity period of a pre-approval?
- How many pre-approvals should you get?
- When to start the pre-approval process
- Pre-approvals vs. pre-qualifications
- The pre-approval timeline
- Preparing for pre-approval expiration
Let’s dive in!
What is Mortgage Pre-Approval?
Mortgage pre-approval is when a lender reviews your finances – income debts assets, and credit history – to estimate the mortgage amount you may qualify for.
Pre-approval is based on a preliminary assessment of your financial situation. The lender doesn’t require you to have an identified property to evaluate.
Once pre-approved, you’ll receive a pre-approval letter. This letter states the amount you’re pre-approved for, projected interest rates, and any conditions for the pre-approval.
Pre-approval doesn’t guarantee final mortgage approval. But it does indicate you have the financial capacity to obtain a mortgage of that amount. Final approval is contingent on further verification later in the mortgage process.
Why Get Pre-Approved?
There are a few key benefits to getting pre-approved before house hunting:
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Know your budget Pre-approval lets you know the likely maximum home price and loan amount you can afford This helps you set realistic expectations when searching for homes,
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Show sellers you’re serious. Pre-approval letters assure sellers you’re financially ready to move forward. In competitive markets, sellers prefer buyers who are pre-approved.
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Strengthen your offer Pre-approval can give you an edge if you’re up against other offers without pre-approval
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Speed up the process. Much of the documentation and verification required for final mortgage approval is done upfront during pre-approval. This streamlines the rest of the transaction.
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Lock in rates. Some lenders let you lock in an interest rate with your pre-approval for 60-90 days. This protects you from rate increases while you search for a home.
How Long Do Pre-Approvals Last?
Most mortgage pre-approvals are valid for 60-90 days.
Some lenders provide pre-approvals valid for 120 days – about 4 months. Longer terms aren’t very common, as lenders want to re-verify your financial details within a certain window.
Here are some factors that influence the validity period of a pre-approval:
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The lender. Each lender sets their own pre-approval expiration policy. So validity periods can range from 30 to 120 days depending on the lender.
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Your financial profile. Borrowers with exceptional credit scores and financial histories may get slightly longer pre-approval periods. Those with weaker financial profiles usually have shorter pre-approval terms.
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Loan program. Government-backed loans like FHA and VA loans tend to have shorter pre-approval validity than conventional loans.
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Market conditions. When mortgage demand is high, lenders may shorten pre-approval periods to limit their risk as rates and regulations shift.
No matter the specific timeframe, most lenders require you to reapply if you don’t secure a home within the pre-approval period.
How Many Pre-Approvals Should You Get?
It’s recommended to get pre-approved with 2-3 lenders to compare options. However, getting too many pre-approvals can negatively impact your credit.
Each pre-approval requires a hard credit pull, which can lower your score. Too many hard pulls sends the message you’re desperate for credit.
Fortunately, credit bureaus allow you to “rate shop” for a mortgage within a short window without accumulating hard pulls. This shopping period is usually 14-45 days.
Getting all your pre-approvals done within this shopping period will result in just one hard pull on your credit report. Any lender you apply with after the shopping period will initiate a new hard pull.
When to Start the Pre-Approval Process
Timing is important when it comes to pre-approval. Start it too soon, and your pre-approval may expire before you find a home. Start it too late, and you may miss out on great opportunities or compromise your negotiating power.
As a general rule, begin pursuing pre-approval once you’re ready to actively start searching for homes, such as:
- You’ve met with a real estate agent to discuss your homebuying goals and parameters.
- You’ve got your down payment and other funds lined up.
- You intend to start touring homes very soon.
- You’re planning to make an offer within the next 2 months.
Initiating pre-approval as you begin your active home search sets you up for success. But remember – shop for homes well within your validity period, before your pre-approval expires.
Pre-Approvals vs. Pre-Qualifications
Pre-approval and pre-qualification sound similar but are different:
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Pre-approval is a lender’s tentative commitment to lend, after reviewing your financial information. You’ll get a detailed pre-approval letter.
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Pre-qualification is a quick estimate of your potential maximum loan amount, based on limited unverified details from you. It’s not a firm commitment to lend.
While less stringent than pre-approval, pre-qualification can still help you get an idea of affordability. But pre-approval carries more weight and puts you in a stronger buying position.
The Pre-Approval Timeline
Wondering how long the pre-approval process takes?
Here are the general steps and timeframe:
1. Research lenders (1-2 weeks)
Shop around and compare options from several lenders before applying. This helps ensure you choose the best lender for your needs.
2. Submit pre-approval application (Minutes to 1 day)
Fill out a pre-approval application with your selected lender. This collects information like income, employment, assets, and liabilities.
3. Provide supporting docs (1-5 days)
Supply documents like tax returns, paystubs, and bank statements to verify your application details. Efficient submission speeds up the process.
4. Lender review (1-2 days)
The lender will assess your income, debts, assets, credit, and submitted documents to determine your amount. Pre-approvals can often be completed in 24-48 hours.
5. Receive pre-approval letter (Minutes to 1 day)
Once approved, the lender issues a pre-approval letter outlining proposed loan terms. If done online, delivery of the letter may be nearly instant.
So in total, you can receive a pre-approval letter within 3-10 business days in many cases. Just be sure to start at least 2 months before you need to make an offer, so it doesn’t expire before you buy.
What to Do Once Your Pre-Approval Expires
Don’t panic if your pre-approval expires before you find a home – you have options:
Reapply with the same lender. The quickest option is often to reapply with the same lender for a new pre-approval. Provide updated details and documents. As they already have much of your earlier verification, this may only take a few days.
Extend your pre-approval. Some lenders will extend your pre-approval for a short period upon request. This avoids a full reapplication. But extensions are usually limited to an extra 7-30 days.
Renegotiate your rate. If rates were higher when you first got pre-approved, reapplying may actually score you a lower rate. Discuss options to renegotiate your rate with your lender.
Apply with a new lender. Shopping around with a few different lenders can help you find the best deal. Just be mindful of credit impacts from applying with too many lenders.
Act fast once reapproved. Once you obtain an updated pre-approval letter, move quickly! Only spend time looking at homes currently listed, and be ready to make an offer immediately when you find the right one.
The Bottom Line
While pre-approval validity periods span 30-120 days depending on the lender, a 60-90 day timeframe is most common. To maximize this window, time your pre-approval so it aligns closely with the start of your active home search. Monitor your pre-approval expiration date, and be prepared to reapply if you
Choose Your Lender
The Consumer Financial Protection Bureau (CFPB) recommends comparing at least three mortgage lenders to discover the different types of loans available. Getting preapproval from multiple lenders can help you find the loan with the lowest interest rate and fees, potentially saving you thousands of dollars over the life of the loan.
Comparing lenders could cost you money upfront, but it may be worth the investment if you find a lower rate that provides substantial savings over time. When youre ready to begin making purchase offers, youll submit a preapproval application to the lender or lenders of your choice. You may be charged a fee of several hundred dollars, but in most cases, you can get that back as a credit if you end up getting your mortgage with that lender.
What Is a Mortgage Preapproval?
A mortgage preapproval is a document from a lender indicating you are conditionally approved for a mortgage loan—up to a specific amount—to buy a house. It usually specifies the type of loan you qualify for and the interest rate the lender would charge you upon completion of a full mortgage application.
Applying for preapproval is essentially the same as applying for a mortgage. Your lender will assess your income, assets, debt and employment history, and review your credit report and credit score. Keep in mind, preapproval should only be viewed as a preliminary document. This means your lender will not fully approve your loan or finalize terms until they verify information about you and any other borrowers on the loan application as well as the property you wish to buy.
A mortgage preapproval letter is valuable because it attests to your ability to follow through on a purchase offer. It can provide a significant advantage in competitive housing markets: When a seller is considering several similar offers for a home, a bidder with preapproved financing may have an edge over others who do not, on the grounds that your ability to secure financing is more certain than that of rival bidders. In hot housing markets, sellers may only consider offers from prospective buyers who are already preapproved for a loan.
How Long Is My Pre-Approval Letter Good For? (What To Know About Mortgage Pre-Approval 2022
FAQ
How long is a loan pre-approval good for?
Is a pre approval good for 120 days?
Does a pre-approval hurt your credit?
How long do you have to use pre approval?
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 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.
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.
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.