How Long Does A Mortgage Preapproval Last?

It’s a good idea to get a mortgage preapproval before you start house hunting and apply for final mortgage approval. A preapproval shows sellers that you’re a serious buyer and helps set a realistic price range for your home search. But it won’t last forever. Most mortgage preapprovals last 60 – 90 days. If your home search takes longer than that, it can expire.

Learn how to time your mortgage preapproval so it doesn’t hit its time limit before you find your dream house – and learn what to do if your preapproval expires.

What Is Mortgage Preapproval?

A mortgage preapproval allows you to take care of a part of the home buying process in advance. A preapproval gives prospective home buyers a realistic idea of how much money they can likely borrow from a lender.

How Does Mortgage Preapproval Work?

Here’s a quick overview: A potential borrower supplies a lender with financial information and documents, including pay stubs, tax returns, bank statements and other information. The lender reviews the submitted information and checks the borrower’s credit score.

Based on your financial information and credit score, a mortgage lender can determine whether you qualify for a loan, and it helps them determine a loan amount, mortgage payment amount and interest rate.

Sellers like to see that a buyer is preapproved. It increases a buyer’s chances that the seller will accept their purchase offer. In a seller’s market, many sellers won’t even consider an offer that doesn’t come with a preapproval letter.

And here’s an important distinction to keep in mind – preapproval isn’t the same as prequalification. A prequalification is a rough estimate of the loan amount you may qualify for based on self-reported information. A preapproval is a deep dive into a borrower’s finances and credit history.

What Is A Mortgage Preapproval Letter?

You’ll receive a preapproval letter after you go through the preapproval process.

The mortgage preapproval letter will include the tentative mortgage loan amount, interest rate and other loan terms. The letter will also clearly state the expiration date of your preapproval.

How Long Does A Preapproval Last?

A mortgage preapproval typically lasts about 60 – 90 days, giving you a reasonable time frame to find the right home and close on it. However, this range of time can vary by lender.

 

Lenders set limits on the terms in the preapproval letter to protect you and the lender. Your finances can change dramatically within a few months, so the window is narrow to make sure everything is still accurate when you find the home you want.

 

If you haven’t purchased a home by the time the preapproval letter expires, you’ll need to reapply for another preapproval with your lender or a new one.

When Should You Get Preapproved For A Mortgage?

Preapproval is a vital step when buying a home. It’s a good idea to get preapproved once you get serious about your home search.

 

Real estate agents often want to see a preapproval letter to make sure the houses they show you stay within your budget. Sellers like them because it signals that a borrower has the potential to qualify for a loan.

 

If you’re serious about buying, a preapproval letter can offer a competitive edge over other home buyers in any real estate market.

What Happens If Your Mortgage Preapproval Expires?

Contact your lender to discuss renewing your preapproval if it expires. You may need a new preapproval and have to submit new or updated financial documents to reflect your current financial situation.

The Mortgage Preapproval Process

Let’s walk through the steps of the mortgage preapproval process.

Step 1: Review Your Credit Report

Read through your credit report to help decide which loans you may qualify for. And check your credit score because certain loans require a minimum credit score to qualify.

 

You can get your credit report for free at AnnualCreditReport.com – ordering a report won’t affect your credit score. Examining your credit report can help you uncover errors and get them corrected before applying for a loan.

 

Your lender will perform a hard credit check as part of the preapproval process, causing your credit score to experience a short-term dip. If you’re shopping around for a loan and comparing lenders, multiple credit check inquiries made within 45 days typically count as one hard inquiry.

Step 2: Gather Your Documentation

Your lender will let you know which documents to provide, such as bank statements, pay stubs and personal identification, like your Social Security number or driver’s license. After your lender reviews your documents, they’ll likely conduct the credit check. The higher your credit, the more likely you’ll get more favorable loan terms.

Step 3: Submit An Application

Most lenders allow you to apply online. You’ll need to answer a few questions and likely upload documentation. Lenders usually take 3 business days to review your information and determine whether to approve you for a loan.

Step 4: Receive Details Of Your Preapproval

Once you’re preapproved, you’ll receive a letter outlining the details of your preapproval. If the lender denies the preapproval, ask them why. Maybe you need to fix your credit history by correcting errors on your credit report. Maybe you need to boost your credit score or pay off debt before you apply for preapproval again. Talk through the specific steps you should take to avoid preapproval denial.

How Many Mortgage Preapproval Letters Should You Get?

You can get and compare preapproval letters from different lenders to help uncover the best deal, find the best mortgage rate and decide which lender you’ll have the best working relationship with. Remember, multiple preapprovals can drop your credit score unless all the credit checks happen within 45 days, which will count as a single inquiry.

The Bottom Line

Preapproval can help you shop for homes in the appropriate price range. With your proven creditworthiness, you can benefit from faster showings and show sellers you’re serious about purchasing a home.