When Does a Mortgage Pre-Approval Expire?

There are many steps in buying a home. If you are a first-time buyer, there is much to learn and remember. An important part of the process is getting a mortgage, but before that, you need a mortgage preapproval.

However, a pre-approval for a mortgage doesn’t last forever. The lender’s preapproval letter will expire, requiring you to go through the process again.

So, how long will a mortgage preapproval last? We take a look.

What is Mortgage Preapproval?

When you are preapproved for a home loan, the lender supplies a letter stating the amount they will lend. To find this amount, the lender reviews your income, debts, and assets to calculate how much you can pay each month.

While you might have heard of mortgage prequalification, it isn’t the same as pre-approval. Though the lender still looks at your finances in both cases, preapproval is a more thorough assessment.

When applying for preapproval, the lender will request information from you, including:

• Pay stubs
• Bank account statements
• Tax records
• Details of credit card and student loan debts
• Information about your assets like stocks
• Retirement savings records

A loan officer will require this information and use it to calculate your debt-to-income ratio. This shows how much you can afford to pay monthly in mortgage payments. These details will also affect the interest rate the lender will offer.

How Long Does Preapproval Last?

Your finances change, so the lender’s preapproval cannot last forever. Because of this, a preapproval will only remain valid for between 60 and 90 days, typically.

When this period expires, you will need a new preapproval letter. However, since you have already gone through the process once, renewing the preapproval letter is easier, though it isn’t certain you will be approved for the same amount.

However, another hard inquiry on your credit report will temporarily lower your credit score.

Why is a Preapproval Letter Important?

With a preapproval letter, you can see exactly how much the lender will loan you. It may also indicate some of the important terms and conditions of the loan.

The letter is useful when searching for a home as it shows the seller that you are a genuine buyer. It shows that you can afford the home and that your finances are good enough for the mortgage. This will put you ahead of potential buyers that don’t have a letter and means that your offer could stand a better chance with the seller.

When your offer is accepted, it will be easier for your lender to approve your mortgage application as they’ve already done much of the work.

How Do You Get Preapproved for a Mortgage?

You might be able to apply for preapproval online through a financing company or meet with your bank or another type of lender. They will want documents to prove your ID, like your social security number, driver’s license, or state-issued photo ID.

They will also require proof of income or employment, like pay stubs and W-2 forms. They need federal income tax returns for the last two years as well.

You might need to provide bank statements, credit information, details of your debts, information about your assets, and more.

When the lender looks at your finances to determine if you qualify for the loan you want, they will perform a hard inquiry on your credit report. An inquiry like this is recorded in your credit report and temporarily lowers your credit score by a few points.

While you might expect that if you compare different lenders, each hard inquiry will lower your credit score and harm further applications, that isn’t the case. If you apply for the same type of loan with different lenders within a few weeks of each other, each application won't negatively affect your credit score.

For example, if you apply for an FHA loan because you love the low down payment requirement with one lender, doing the same with another will not make a difference.

How Long Does the Preapproval Process Take?

Preapproval can be fast if you have all the right documents ready when applying. You might even be approved on the same day.

But it can take longer, depending on your debts and financial history. For this reason, you should make sure you find out everything you need to bring before the meeting with your lender.

When you are ready to get serious about finding a home, comparing lenders and going through the pre-approval process is an important step.

Final Thoughts

Getting pre-approval for a mortgage is an essential step in the home-buying process. You won't be taken seriously without being pre-approved when making an offer.

Get your pre-approval done and out of the way early to know exactly what you can afford to spend on a home.