How Long Do Mortgage Offers Last? What Home Buyers Should Know

A mortgage offer represents a lender’s conditional agreement to provide funds for a home purchase. This formal document outlines the terms and conditions, including the loan amount and interest rate. Potential homebuyers should understand that these offers are not indefinite; they come with a finite validity period.

Standard Offer Durations

Most mortgage offers remain valid for 30 to 90 days, though some can extend to six months. The exact duration varies by lender and market conditions. Some lenders count the validity period from the application date, while others start from the offer issue date. This differs from preliminary approvals like pre-qualification or pre-approval, which are less formal estimates of borrowing capacity and typically last 60 to 90 days. The binding commitment offer is what secures the loan.

Factors Influencing Offer Validity

Several factors can lead to a mortgage offer becoming invalid or expiring prematurely, even within its stated duration. A significant change in the borrower’s financial situation after the offer is extended can impact its validity. This includes events like job loss, taking on new substantial debt, or a notable decline in credit score. Lenders reassess these changes as they can affect the borrower’s ability to repay the loan.

Property-related issues also play a role in an offer’s continued validity. If the home appraisal comes in lower than the agreed-upon purchase price, or if significant problems are discovered during a home inspection, the lender may re-evaluate the terms of the offer. Unresolved title problems, such as outstanding liens or ownership disputes, can also jeopardize the mortgage commitment. Additionally, shifts in market conditions, particularly rising interest rates, can influence an offer’s terms. While a rate lock protects the interest rate for a period, the rate lock itself has an expiration date, which is part of the overall offer’s validity.

Consequences of an Expired Offer

If a mortgage offer expires without the loan closing, the borrower will likely need to reapply for a new loan. This often necessitates new credit checks, updated financial documentation, and potentially new appraisal or underwriting processes. There is a risk of losing favorable terms, such as a specific interest rate or loan amount, if market conditions have changed since the original offer. Rising interest rates can lead to a higher cost of borrowing.

An expired offer can also have significant repercussions for the home purchase contract. It may lead to substantial delays in closing, or even the entire deal falling through. In some cases, the borrower might risk losing their earnest money deposit if the contract contingencies are not met due to the expired mortgage offer.

Managing Your Mortgage Offer

To ensure a smooth closing within the validity period, borrowers should maintain close and regular communication with both their lender and real estate agent. Providing all requested documentation promptly and responding to any lender inquiries without delay can help keep the process on track. It is also important to avoid significant financial changes from the time the offer is received until closing. This includes refraining from taking on new debt, changing jobs, or making large purchases that could alter your debt-to-income ratio or credit score.

If unforeseen delays occur, it may be possible to request an extension from the lender. This request should be made as early as possible, ideally a few weeks before the original expiration date. While extensions are not guaranteed and might involve additional fees or a re-evaluation of terms, proactive communication increases the likelihood of approval.