What Happens If Your Pre-Approval Expires?

A mortgage pre-approval provides a preliminary assessment from a lender regarding the amount you might be eligible to borrow for a home purchase. This conditional approval is typically valid for 60 to 90 days. As this period approaches its end, or has passed, many homebuyers wonder about the implications for their plans.

Understanding Pre-Approval Expiration

Pre-approvals have an expiration date because a lender’s assessment is based on a snapshot of your financial situation and current market conditions. Over time, both personal finances and the broader economic landscape can change, requiring a fresh review. For instance, interest rates can fluctuate, or an applicant’s income, employment status, or debt obligations might shift.

The expiration of a pre-approval letter means the original document is no longer considered a current or binding commitment from the lender. It does not signify that you are no longer eligible for a loan, nor does it imply that your home-buying journey is over. Instead, it indicates the lender requires updated information to re-evaluate your borrowing capacity and terms.

This is common, especially in competitive housing markets where finding a suitable property can take longer than anticipated. While an expired pre-approval might introduce slight delays, it primarily requires you to provide current financial documentation. The lender needs to ensure their initial assessment remains accurate given any potential changes.

Information Needed for Re-Qualification

To re-qualify for a pre-approval, lenders request updated financial documents to verify your current income, assets, and liabilities. This includes recent pay stubs, usually for the most recent 30-day period, to confirm your gross income and deductions. Lenders examine these to ensure consistent employment and income levels.

You will also need to provide W-2 forms from the past two years, detailing your annual wages and taxes withheld. If you are self-employed or have other complex income streams, two years of federal tax returns, including all schedules, will be necessary to assess your net taxable income and business profitability.

Bank statements for all checking and savings accounts, usually covering the most recent two months, are required to verify your available funds for a down payment and closing costs. Lenders look for consistent balances and may inquire about any unusually large or unexplained deposits. Statements for investment accounts, such as brokerage or retirement accounts, are also needed to confirm additional liquid or semi-liquid assets.

Documentation detailing existing debts, such as auto loans, student loans, or credit card statements, will also be requested to assess your current debt-to-income ratio. Lenders use this ratio to determine your capacity to take on new mortgage payments. Finally, you will need to provide consent for the lender to re-pull your credit report, which reflects your latest credit score and borrowing history.

The Re-Application Process

Once you have gathered all updated financial documentation, initiate the re-application process with your lender. It is advisable to contact your original lender first, as they have your previous application on file and are familiar with your financial profile. Inquire about their specific procedures for renewing an expired pre-approval.

The process involves submitting your updated documents for the lender’s review. This allows them to reassess your eligibility based on your current financial standing and market conditions. During this review, the lender may re-pull your credit report to ensure the information is current, which typically results in a new hard inquiry.

Following a successful review, the lender will issue a new pre-approval letter, reflecting your updated borrowing capacity and potentially adjusted interest rates or loan terms. The timeline for receiving a renewed pre-approval often takes a few business days to a week, depending on the lender’s current volume and the completeness of your submitted documents.

If your financial circumstances have changed significantly, or if you wish to explore different loan products or terms, you also have the option to seek pre-approval from a different lender. This involves starting a new application process with the new institution, providing all your updated financial information. Comparing offers from multiple lenders can sometimes yield more favorable terms, but it requires a complete re-submission of documents and a new credit inquiry.