A mortgage preapproval can be an important first step when you are preparing to buy a home. It gives you a better idea of your potential financing and can show sellers that you have already spoken with a lender.
But a preapproval does not last indefinitely. Your finances can change, documentation can become outdated, and the letter itself may have an expiration date.
What Is a Mortgage Preapproval?
A mortgage preapproval is a lender's preliminary evaluation of your ability to qualify for financing based on financial information reviewed during the process. Depending on the lender, this may include your income, assets, debts, employment, and credit history.
A preapproval is not final loan approval or a guarantee that your mortgage will close. Final approval depends on updated borrower information, underwriting, the property, appraisal requirements, and other applicable loan conditions.
How Long Does a Mortgage Preapproval Last?
According to the Consumer Financial Protection Bureau, mortgage preapproval letters typically have expiration dates of about 30 to 60 days. The exact period depends on the lender and the information used to issue the letter.
If you are planning to shop for several months, ask your lender how long your specific preapproval letter will remain valid and what will be required to update it.
Why Does a Mortgage Preapproval Expire?
A preapproval represents your financial situation at a particular point in time. Income, employment, debts, assets, and credit can change while you are searching for a home.
Mortgage documentation also has age requirements. For example, current Fannie Mae guidelines generally require credit documents, including credit reports and employment, income, and asset documentation, to be no more than four months old as of the mortgage note date.
What Can Affect Your Preapproval?
Even before the letter expires, significant changes to your finances can affect your mortgage qualification. Examples include:
- Changing jobs or experiencing a change in income
- Financing a vehicle or other major purchase
- Opening new credit accounts
- Increasing credit card balances
- Taking on additional monthly debt
- Using savings intended for the home purchase
If your financial circumstances change while house hunting, tell your mortgage professional rather than waiting until you are under contract.
What Happens if Your Preapproval Expires?
An expired preapproval does not necessarily mean starting the entire mortgage process over. Your lender may be able to refresh the preapproval by obtaining updated documentation and reviewing your current financial situation.
Depending on how much time has passed, you may need to provide updated income and asset documents and authorize another credit review. If your finances have changed, the loan amount or terms for which you qualify may also change.
When Should You Get Preapproved?
Getting preapproved too early could mean updating the letter before you find a home, while waiting until you are ready to make an offer could create unnecessary pressure.
A practical time to seek preapproval is when you are preparing to begin a serious home search. Getting started early enough can also help identify credit, income, documentation, or budget issues before you are competing for a property.
Keep Your Mortgage Preapproval on Track
While shopping for a home, continue paying bills on time, keep saving for your down payment and closing costs, and avoid unnecessary financial changes. Before opening new credit or making a major purchase, consider discussing the potential impact with your mortgage professional.
Loan Wolf Lending can help Florida homebuyers get preapproved and understand the financing available for their home search. Call 754-755-3075 to discuss your homebuying plans.