Do Mortgage Pre-Approvals Expire & How Long Do They Last?

A mortgage pre-approval represents a lender’s conditional commitment to loan a specific amount for a home purchase. This formal process involves a thorough review of an applicant’s financial profile, including income, assets, debts, and credit history. Obtaining a pre-approval provides a clear understanding of one’s borrowing capacity, which is helpful for budgeting during the home search. It also signals to sellers and real estate agents that a buyer is serious and capable of securing financing, which can strengthen a purchase offer in a competitive market.

Standard Pre-Approval Lifespan

Mortgage pre-approval letters typically include an expiration date, often ranging from 30 to 120 days, with 60 to 90 days being most common. This timeframe allows lenders to ensure that the financial information used for the pre-approval remains current and accurate.

A pre-approval is not a guarantee of a loan, but rather a conditional approval based on a snapshot of the borrower’s financial health at a specific moment. The expiration period accounts for potential changes in the borrower’s financial situation or shifts in the broader market conditions. Knowing this validity period is important for homebuyers to strategically time their home search and offer submissions.

Circumstances Affecting Validity

A mortgage pre-approval’s validity can be affected by changes in a borrower’s financial standing. A significant change in employment, such as a job loss, a switch to a commission-based role from a salaried position, or moving to a different industry, may require lender re-evaluation. Lenders prioritize stable income, and any perceived instability could alter the pre-approval status.

Taking on new debt or making large purchases, like financing a new car or furniture, can also impact pre-approval. Such actions increase a borrower’s debt-to-income ratio, potentially reducing the loan amount for which one qualifies. Likewise, a notable decrease in a borrower’s credit score due to missed payments or new credit inquiries can lead to less favorable loan terms or even invalidate the pre-approval. Furthermore, fluctuations in market interest rates can affect borrowing power, as an increase in rates might reduce the amount a borrower can afford.

Steps After Expiration

If a mortgage pre-approval expires or is nearing expiration, contact the original lender. Reapplying for pre-approval is a standard process and generally does not incur penalties. The lender will require updated financial documentation to assess the current situation.

This involves providing recent pay stubs, updated bank statements, and information regarding new debts or employment changes. A new credit check will likely be performed. While the lender already has most of the initial information on file, this refresh ensures that the new pre-approval letter accurately reflects current income, assets, debts, and credit score. Having a current pre-approval letter is helpful when making an offer on a home, as it demonstrates readiness to proceed with a purchase.