How Long Is a Pre Approved Home Loan Good For?

Find out how long a pre approved home loan is good for and how to keep it active to make the home buying process easier.

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Mortgage Basics

A pre-approval is when a potential mortgage lender looks at your finances and tells you how much they are willing to lend you. This puts you in a much better position when you are looking for a home because you know how much you can afford to spend. A pre-approval is usually good for 90 days, but it can vary from lender to lender.

Pre-approval

A mortgage pre-approval is a written statement from a lender that signifies how much money you can borrow to purchase a home. The letter will show the maximum amount of loan you’re eligible for, and some of the conditions you must meet to get it.

A pre-approval is not a guarantee that you will actually receive the loan. It’s just an estimate of how much you could potentially borrow, based on information you provide at the time of application. This means that if your financial situation changes before you apply for the mortgage, the amount in your pre-approval letter might be different than what you’re ultimately approved for.

The best way to avoid any surprises is to get a new pre-approval letter from your lender before you start shopping for a home. That way, you’ll know exactly how much loan you have to work with.

Keep in mind that a pre-approval is not the same as getting final approval for the loan. You’ll need to submit additional information, such as tax returns and proof of employment, before the lender can give you final approval for the mortgage.

Mortgage terms

Mortgage loans are generally speaking, either long-term (15 to 30 years) or short-term (five to seven years). The vast majority of homebuyers choose long-term mortgages because they have lower monthly payments. But there are certain situations where a short-term mortgage makes more sense.

The most common reason to get a short-term mortgage is if you anticipate having the mortgage paid off within a few years. This might be because you’re buying a starter home and expect to move up to a larger home within five years, or you plan to refinance the property once you’ve built up some equity.

Another reason to get a short-term mortgage is if you need the lower monthly payments that come with a shorter loan term. This might be the case if your income is temporarily low, such as during an unpaid leave of absence, or if you’re already carrying a lot of debt and need the break that comes with lower monthly mortgage payments.

Whatever your reason for choosing a short-term mortgage, it’s important to understand that they typically come with higher interest rates than long-term loans. That’s because lenders see them as being riskier—after all, there’s more time for things to go wrong in a 30-year loan than in a five-year loan. As such, you’ll want to make sure that you’re comfortable with the higher interest rate before signing on the dotted line.

How long is a pre-approved home loan good for?

A pre-approved home loan is good for a set period of time, usually six to twelve months. This is the time during which your loan offer is valid. If you do not purchase a home during this time, you will need to reapply for a loan.

Factors that can affect your loan

A pre-approval is typically valid for a brief period of time – generally no more than 90 days – because your supporting documentation, such as pay stubs and bank statements, may have an expiration date. In addition, if your financial situation changes – for example, you switch jobs or receive a pay cut – your loan’s pre-approval status may no longer be valid.

Tips for maintaining your loan

Pre-approved home loans are a great way to get a jump start on the mortgage process. A pre-approval means a lender has evaluated your creditworthiness and has decided to give you a loan up to a certain amount, based on certain underwriting guidelines. But how long is that pre-approval good for?

Typically, a pre-approval is good for 60-90 days from the date of issue, but this can vary depending on the lender and the type of loan you’re applying for. If your pre-approval expires and you haven’t found a home yet, you’ll need to go through the pre-approval process again.

Here are some tips to help you maintain your pre-approved status:

1. Keep an eye on interest rates: If rates go up, your loan amount may decrease; if rates go down, your loan amount may increase. Depending on how much rates change, you may need to re-apply for your loan.
2. Watch your credit score: If your credit score goes down, you may need to re-apply for your loan or provide additional documentation to prove your creditworthiness.
3. Don’t make any major financial changes: If you change jobs, get married, or have any other major financial changes, be sure to let your lender know. These changes could affect your ability to repay the loan and may require re-documentation.
4. Keep in contact with your lender: If anything changes with your application (credit score, employment status, etc.), be sure to let your lender know right away. They may be able to help you adjust accordingly and keep your pre-approved status intact.

Conclusion

The bottom line is that a pre-approval is not a guarantee of financing. Rather, it’s a valuable tool that real estate agents and sellers often prefer when working with serious buyers. If you have been pre-approved for a loan, you have a head start on the competition and may be able to move forward with confidence.