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How Long Does a Mortgage Pre Approval Last?

How long does a mortgage pre approval last

The length of time a pre-approval lasts varies by lender, but in most cases, it is good for at least 90 days.  Many lenders’ pre-approvals will not expire until the credit expires, which is 120 days.  If your financial status changes dramatically during the pre-approval timeframe, your pre-approval would not expire but the loan would have to be approved based on the new changes. 

However, a borrower’s financial status changing can be beneficial. For example, if the credit score improves from the beginning of the process to when the buyer is under Contract, there might be an opportunity to obtain a lower interest rate. So, always work on improving your credit score because there could be a benefit if the score is updated quickly enough.

Alternatively, credit scores can plummet, debt levels could rise, or something else could damage the capacity to make mortgage payments, reducing the chances of going further in the loan process. In that instance, the pre-approval may come with a higher interest rate or a smaller loan amount. If the negative changes are significant, you may not qualify at all.

Some people’s financial circumstances remain unchanged, but because they have yet to purchase a home, their mortgage pre-approval expires. In that scenario, the only item needed is a new credit report. Once you find a property, updated income and asset documents will be required as well.

How Long Does It Take To Get Pre Approved For A Mortgage?

You may be able to acquire pre approval within a couple of days if you have all of the necessary papers when you apply with your lender. But keep in mind that everyone’s financial situation is unique and underwriting turn times vary.  So, plan on the process taking approximately a week. 

Getting preapproved for a mortgage may take longer depending on factors such as your debt, credit score, and other financial issues. Your best bet is to contact your lender ahead of time to make sure you have all of the information they’ll need.

Understanding the function of a mortgage pre-approval in the home-buying process might make the difference between getting the house you want and losing it to someone who was better prepared! When you’re ready to start truly looking for a property, do your research to find a lender and obtain a preapproval letter.

Documentation Needed for Pre Approval

You’ll need to provide a number of documents to verify your information after you’ve submitted your mortgage application. On your part, preparation and organization will make the process go more smoothly. Here’s a list of the paperwork you’ll need to be pre-approved or get final loan approval before closing:

  • Bank statements for the previous 60 days
  • Pay stubs over the previous 30 days
  • Tax Returns and W2’s from previous two years
  • Self-employed borrowers will need to provide personal and business returns and K-1’s (Form 1065) if applicable.
  • Account statements for assets (retirement savings, stocks, bonds, mutual funds, etc.)
  • Driver’s license
  • Divorce Decree (to use alimony or child support as qualifying income), if applicable
  • Gift Letter (if funding your down payment with a financial gift from a relative)

How Long Do You Have To Buy A House After Pre Approval?

Pre-approval letters for mortgages are usually good for 30 to 90 days, and in some cases as many as 120 days.  Because your finances and credit profile may change, some lenders will  include an expiration date on these letters. To acquire a new pre-approval, you’ll need to have your lender re-pull credit.

If you’re just getting started thinking about purchasing a house and feel you’ll have trouble receiving a loan, going through the pre-approval process can help you detect credit issues and allow you time to fix them.

Obtaining a pre-approval six months to one year before a serious property hunt will put you in a better position to improve your overall credit rating. Additionally, you’ll have more time to save for a down payment and closing costs.  So, if there are any doubts about your ability to obtain a pre-approval, always start sooner rather than later.

When you’re ready to make an offer, some sellers will want  a mortgage pre-approval letter, which will require income and asset documentation. Because of high buyer demand and a limited number of houses for sale in many hot property markets, sellers may be less reluctant to consider bids without pre-approval letters.

How Long Does It Take To Close On A House After Pre Approval?

The average time between getting a mortgage pre-approval and closing on a house is 30 days. The process can take longer if you are not prepared or have the required documentation. However, it is also dependent on the location of your transaction. In a hot market like San Francisco, California, for example, it may take longer due to appraisers being backed up.

Ways To Speed Up The Process

If you’re buying in a hot market or have a deadline to get out of your present home, getting pre-approved for a loan and closing on the new house can save you time. Pre-approval indicates that the lender feels it will be able to lend you the money for the house at first glance. This is usually determined by examining your credit score, income and assets.

A Pre-approval is different from a pre-qualification and will go in more depth with your income and assets.  Additionally, with a pre-approval, your loan has already been conditionally approved by an Underwriter.  However, we will go into more detail later regarding the differences between the two.

Final Closing

You’ll most likely be scheduling home inspections, completing a title search, and other activities associated with buying a home within the first week after loan approval. The loan officer can usually complete all of the processes in a week or two if those companies are not backed up, but this is contingent on the schedule and availability of others.

You may want to ask your real estate agent to extend the closing date by three to five days to avoid complications with not being ready to close on time. This will give you time to get any last-minute items, such as a copy of your homeowner’s insurance policy or a copy of the home inspection report.  However, with an experienced loan officer, this shouldn’t be necessary.

How Long Does a Mortgage Pre-Approval Last On Credit Score?

When obtaining a pre-approval, a credit inquiry is required.  However, one credit inquiry or a couple from different mortgage companies should have little to no impact on scores.  Although hard inquiries can stay on your credit reports for up to 120 days, their impact fades over time. 

Do Mortgage Approvals Expire?

The majority of mortgage pre-approvals are good for 30-90 days, after which your pre-approval letter will expire. Before closing your mortgage, lenders are obligated to re-verify your finances. A more thorough examination and screening process will determine the final lending amount of your mortgage.

You’ll need to contact your lender again with your revised information and ask for a new pre-approval letter after it expires. The good news is that because they have most of your information on file, this usually doesn’t take long. However, keep in mind that reapplying can result in another hard inquiry on your credit report, thus lowering your credit score in some cases.

So, in summary, each lender determines the shelf life of its pre-approval letters. So, inquire about how long the pre-approval is good for each company.

Pre-approved vs. Pre-qualified

You’ve probably heard the terms “pre-qualification” and “pre-approval” used interchangeably, but they’re not the same. Getting pre-qualified means the lender has an application, the credit has been pulled, and the automated underwriting system has been run and issued an initial approval.  Most of the time, income and asset documents have not been provided to the lender and the initial approval is based on information on the application.  An individual who has been pre-qualified is not as close to a full approval as someone who is pre-approved.  

A pre-approval, on the other hand, involves getting prequalified and supplying all income and asset documents,as well as obtaining an approval from an Underwriter.  This process usually happens after finding a property but can happen before writing a Contract to provide more leverage when competing with other buyers.  

But, generally, the difference is pretty clear:

  • Pre-approval — The lender has all income and asset documents and the Underwriter has approved your loan.
  • Pre-qualification — Less information has been provided to the lender and the loan is further from final approval.

It’s easy to see why many sellers and real estate agents believe that a pre-qualification letter isn’t as valuable as a pre-approval letter. So, if there are multiple offers on properties you are looking for, it is recommended to get a pre-approval.

What Happens If I Don’t Use My Pre-Approval?

Some people’s financial circumstances remain unchanged, but because they have yet to purchase a home, their mortgage pre-approval expires. If this is the case, updated documentation will need to be provided.  

How Many Times Can You Get Pre-approved For a Mortgage?

There is no limit on the number of pre-approvals.  However, this process usually is not necessary multiple times. Additionally, it is not recommended to obtain pre-approvals from multiple lenders.  Only go through this process once you have selected a lender.

Pre-approval Decisions

A lender will normally give you one of two decisions after examining your mortgage application: pre-approval with conditions or denial. Once you have received the pre-approval with conditions, the loan officer or someone on his or her team will send you a list of documents the Underwriter requires.  However, they normally are not required to be submitted until after you have a Contract on a property.  If you receive a denial, the lender should explain the reasons why and offer a plan to address the issues.

Mortgage Pre Approval Conclusion

The very first step to becoming a homeowner is to obtain a pre-qualification. This will ensure you have the ability to purchase a home and you are looking in the proper price range and obtain the best loan product.  If you are looking for more leverage when competing with other buyers, a pre-approval is a good idea.  Most buyers only obtain a pre-qualification and the pre-approval will improve your chances.  

If there are doubts of the ability to obtain an approval, always start early so that any issues can be corrected in advance.  Also, when talking with the various lenders, inquire about how long the pre-qualification and pre-approvals are valid.  When shopping for a lender, make sure all credit inquiries are completed within 30 days so the impact on the credit score is limited.

It’s important to remember that a mortgage pre-approval does not guarantee you a loan. Before your loan closes, pre-approval letters are conditional on your financial and job information being accurate and consistent. Similarly, if you fail to disclose important information, such as a divorce or an IRS tax lien, and a loan underwriter discovers it later, your loan may be denied.

For more information contact the mortgage experts at Mortgage Rates Today at 877-879-7775