How long is a home loan pre approval good for

Q: What happens if my pre approval expires?

Once it expires, youll need to connect with your lender again with your updated paperwork and apply for a new preapproval letter. The good news is, this typically doesnt take too much time since they have most of your information on file.

Pre-approval helps you estimate how much you can borrow, and what your upper limit is, which can help give you confidence looking for a house.

Table of Contents Show

The Best Time to Get Preapproved for a Mortgage
How to Get a Mortgage Preapproval
Check Your Credit Before Getting Preapproved
What happens if my pre approval expires?
Does pre approval hurt credit score?
How long can you hold a pre approved mortgage?

If your mortgage is affordable you're more likely to be able to save for things like holidays and to maintain your current lifestyle.

If it's your first home, then we really want to help you get this right – by not over borrowing. Because if you get your first home right, and you put a good amount of deposit down, it's going to help set you up for the future and stay in control, instead of chasing your tail.

It's a good idea to think about the future - you might have dual income now, but what if a baby comes along or you need to drop from two incomes to one, then one person's income may need to cover the mortgage. If you haven't planned for changes in your life, and you've borrowed 95% of the property's value, it can be high pressure.

So pre-approval can give you confidence to focus on properties you can afford. It helps you to understand how much you can borrow and think about how much you should borrow.

Home loan pre-approval is based on the ability to repay a loan for a specific amount based on your financial position, and it lasts for 3 months.

Prospective homebuyers know the importance of "location, location, location," but timing can be critical too. Securing mortgage preapproval at the right moment in your house-hunting journey can help seal the deal, preserve your credit and spare you unnecessary expenses. Here's the lowdown on when to seek preapproval.

The Best Time to Get Preapproved for a Mortgage

Providing a copy of a mortgage preapproval letter with a purchase offer can indicate to a prospective seller that you have the financial means to follow through on your bid. While preapproval is an optional step in the home financing process, it can be a practical necessity in highly competitive housing markets, especially if rival buyers are able to pay in cash.

It's important to arrange mortgage preapproval only when you're serious about making an offer on a home. Getting preapproval too early in the house-hunting process can be wasteful for the following reasons:

Mortgage preapproval letters are only valid for a limited time—typically 90 days, but possibly as little as 30 days. If you secure preapproval before you're ready to bid, your preapproval letter could expire before you can use it to secure your dream home.
Mortgage preapproval applications can require fees of several hundred dollars. If a letter expires and you have to reapply for another, it'll cost you another fee.
The credit check required for mortgage preapproval generates a hard inquiry on your credit report, which typically causes a small drop in your credit scores. Most scores recover quickly as long as you keep up with your bills. But if your preapproval letter expires and you need to reapply, the second credit check could ding your scores before they have time to bounce back. Since you'll want your credit profile to be as favorable as possible when you submit a final mortgage application, repeat preapproval applications can work against you.

It's also possible to apply too late for a mortgage preapproval. It typically takes only a few days to generate a preapproval letter, once you've submitted all necessary documentation (more on that below). If you're self-employed, have a very limited credit history, or if the lender has questions about any of your back-up documentation, however, the process could take as long as two weeks. Gauge your circumstances accordingly, and don't wait to apply for preapproval when you're already rushed to bid on the ideal property.

If you're still in the early stages of house hunting and are curious about how much you may be able to borrow, consider seeking mortgage prequalification. Prequalification is a less rigorous process than preapproval during which a lender estimates the size of mortgage you might be able to get based on your credit and your responses to a few questions about your income, available down payment and debts.

How to Get a Mortgage Preapproval

Seeking mortgage preapproval from a lender is very similar to submitting a mortgage application. The big difference is that, unlike a mortgage application, preapproval doesn't apply to a specific property. Based on a review of your credit and finances, including your credit and income history, debts and, possibly, other assets or sources of cash, the lender issues a letter indicating how much it is willing to lend you to buy a house, and at what interest rate.

When you apply for mortgage preapproval, you'll need to furnish the lender the following items:

Proof of identity: The lender will need a copy of a passport or driver's license and a Social Security number for each applicant.
Credit approval: You and any co-applicants must authorize the lender to access your credit reports and credit scores.
Income verification: Applicants typically will need to supply pay stubs, bank statements and tax returns for the past two years. If you are self-employed, the lender will average the annual incomes reported on your two most recent federal income tax returns.
Down payment: Depending on the type of loan you seek, you'll typically need to prove you have access to cash in an amount of 5% to 20% of a potential home purchase price. (Certain government-backed loans allow lower down payment amounts.)
Records of debts and assets: Mortgage lenders typically measure borrowers' monthly debt obligations relative to their incomes by calculating debt-to-income (DTI) ratio, and may limit the size of a loan based on the borrower's ability to afford the monthly payments. Lenders often favor borrowers with sufficient resources to cover loan payments for several months in case of temporary income loss, as evidenced by assets such as savings, investments and real estate.

Check Your Credit Before Getting Preapproved

Well before you begin the homebuying process—ideally six months to a year before you seek mortgage preapproval or apply for a mortgage—it's wise to check your credit report and credit scores to know where you stand, and to give you time to clear up any credit issues that might prevent your credit scores from being the best they can be when you're ready to buy your new home.

Mortgage preapproval can give you an important strategic advantage when you're buying a home in today's red-hot real estate markets. Correct timing of your preapproval application is an important tactic in your homebuying game plan.

What happens if my pre approval expires?

Once it expires, you'll need to connect with your lender again with your updated paperwork and apply for a new preapproval letter. The good news is, this typically doesn't take too much time since they have most of your information on file.

Does pre approval hurt credit score?

Inquiries for pre-approved offers do not affect your credit score unless you follow through and apply for the credit. If you read the fine print on the offer, you'll find it's not really "pre-approved." Anyone who receives an offer still must fill out an application before being granted credit.

How long can you hold a pre approved mortgage?

Most mortgage preapproval letters last between 60 – 90 days. Your mortgage preapproval will list how much you're approved to borrow, your interest rate and other terms and conditions. Typically, borrowers should wait until they're ready to actively search for a home before they get preapproved.