A home loan pre-approval is a great way to get the ball rolling on your home purchase. But how long is it good for? We break it down for you.
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The home loan pre-approval process
A mortgage pre-approval is a letter from a lender stating how much of a loan you can qualify for, issued after reviewing your financial history. This document is useful because it guarantees a certain loan amount prior to property shopping, and can sometimes be useful in negotiating a purchase price with a seller. A pre-approval is typically valid for 60-90 days.
How long is a home loan pre-approval good for?
A pre-approval for a home loan is normally good for 60 to 90 days. This is because lenders typically pull your credit report periodically to check for changes that might affect your eligibility for financing.
What can affect the length of time a home loan pre-approval is good for?
There are a few things that can affect the length of time a home loan pre-approval is good for. The most important factor is the stability of your employment and income. If you have been employed at the same job for a long time, and there is no reason to believe that your income will change, then your pre-approval should be valid for a longer period of time. Other factors that can affect the length of time your pre-approval is good for include:
-The type of loan you are seeking (fixed rate or adjustable rate)
-The type of property you are looking to purchase (single family home, condo, etc.)
-The current interest rate climate
-Your credit score
How to extend the length of a home loan pre-approval
A pre-approval for a home loan is originally valid for a period of time specified in the pre-approval letter, typically 90 days. If you do not find a home and enter into a contract to purchase a home within that time period, you will need to obtain another pre-approval.
However, there are ways to extend the length of your home loan pre-approval. One option is to simply request an extension from your lender in writing. Another option is to reapply for a new pre-approval with the same lender or a different one. When reapplying, be sure to update your lender on any changes in your financial situation, such as a new job, raise, or additional debt.
Tips for a successful home loan pre-approval
A pre-approval is a letter that verifies how much house you can afford and gives you an idea of what loan terms (like interest rate and down payment) to expect. But rememeber, a pre-approval is not the same as getting mortgage approval.
A pre-approval does not guarantee loan approval or a specific interest rate. But, having a pre-approval letter does show that you have been through the initial loan approval process with a lender. This can give you an edge over other buyers who have not been pre-approved when bidding on homes.
Here are some tips if you’re hoping to get pre-approved for a home loan:
1. Know Your Credit Score
Your credit score is one of the most important factors lenders will consider when determining whether or not to approve your home loan application. So it’s important to know what your credit score is and take steps to improve it if necessary before applying for a mortgage. You can check your credit score for free with many personal finance apps and websites.
2. Shop Around for the Best Mortgage Rate
Interest rates on home loans vary from lender to lender, so it’s important to shop around for the best rate before settling on a particular lender. You can compare mortgage rates from a variety of lenders online or work with a mortgage broker who will do the shopping around for you.
3. Get Pre-Approved for a Mortgage Loan
Once you’ve found the best mortgage rate, it’s time to get pre-approved for your loan by completing an official mortgage application with your chosen lender. During this process, the lender will verify your income, employment, and credit history to determine if you’re eligible for a home loan and how much they’re willing to lend you. Once you’re approved, you’ll receive a letter stating how much house you can afford which will be determined by factors like your income, debts, and down payment amount.