How Long Do Mortgage Pre-Approvals Last?
Learn the typical duration of a mortgage pre-approval and how various factors can impact its validity throughout your home search.
A mortgage pre-approval is a conditional commitment from a lender, indicating how much they are generally willing to lend to a prospective homebuyer. This step demonstrates a buyer’s financial readiness to sellers, providing a clear budget for property searches. Pre-approvals are not indefinite and carry a specific validity period.
What is a Mortgage Pre-Approval
A mortgage pre-approval involves a lender reviewing a borrower’s financial information, including income, assets, and credit history. Based on this assessment, the lender issues a conditional commitment for a specific loan amount. This process is distinct from a pre-qualification, which relies on self-reported information and provides a less formal estimate of borrowing capacity.
Having a pre-approval offers several advantages. It demonstrates to sellers that a buyer is serious and has verified financing, making their offer more attractive. A pre-approval also helps buyers establish a realistic budget, preventing them from looking at properties beyond their financial reach. This formal commitment can streamline the home search process.
Standard Pre-Approval Lifespan
Most mortgage pre-approvals are valid for 60 to 90 days. Some lenders may offer a shorter duration, such as 30 days, while others might extend it to 120 or even 180 days, depending on their policies and market conditions. This timeframe is standard because financial situations and market conditions can change rapidly.
The expiration date ensures the lender’s assessment is based on current financial data, including recent income, debt, and credit status. It also accounts for fluctuations in interest rates and broader economic shifts. This validity period helps maintain the accuracy and relevance of the conditional loan offer.
Factors Influencing Pre-Approval Duration
Several factors can impact a mortgage pre-approval’s duration, potentially requiring an update or re-evaluation. Changes to a borrower’s financial situation are key. These include a change in employment status, such as job loss or a new job with different compensation, or increases in debt, like new credit card balances or car loans.
Fluctuations in a borrower’s credit score can also affect pre-approval validity. Activities like missed payments, new credit inquiries, or opening new credit accounts can negatively impact the score, prompting a re-assessment.
Shifts in market conditions, such as rising interest rates or changes in lending guidelines, may necessitate a re-evaluation of the approved loan amount. Lenders require updated financial documents, such as recent pay stubs and bank statements, which have their own validity periods, often 30 to 90 days.
Managing an Expiring Pre-Approval
As a mortgage pre-approval approaches its expiration date, or if it has already expired, borrowers should contact their lender. This step is necessary to update their financial information, even if their circumstances have remained stable.
The process involves providing recent documentation such as pay stubs, bank statements, and tax returns for the lender to re-verify current financial health.
A new credit check, known as a hard pull, may be required during this renewal process, which can temporarily affect a credit score. However, multiple inquiries for a mortgage within a short period, 14 to 45 days, are often treated as a single inquiry by credit scoring models. Maintaining financial stability by avoiding new debt or large purchases is important for a smooth re-approval.