How long does a home pre approval last

Getting pre-approved before shopping for a new home is a smart idea, but what if you don’t find the right home quickly? How long does that pre-approval last?

Pre-approval Defined

Before going out with a real estate agent to look for the perfect property, it is wise to get pre-approved with a mortgage lender. This means allowing the lender to run your credit and take a look at your income and assets to determine how much mortgage funding you qualify for. A pre-approval gives you a top number for your house budget to help define your search.

 It also gives you credibility with sellers as it shows them you are a serious buyer. Getting pre-approval does not mean that you are under contract with that particular lender, however. You can apply with a different lender at any point during your home search. The pre-approval letter essentially proves to sellers that you have the ability to secure mortgage funding.

How do I get pre-approved?

The process for pre-approval is simple and painless, especially if you compile the required documents ahead of time. Most lenders will ask for your social security number, proof of employment, most recent pay stubs and W-2s as well as current bank statements. And if you are being helped with your down payment, you will need to provide a gift letter. The whole pre-approval process only takes a day or two.

Pre-approval Time Frame

Most lenders will pre-approve you for 90 days, although some pre-approval letters are good for as little as 30 days. The time frame is limited because lenders qualify you based on your current financial profile. Things like your income, down payment or credit could change, especially over a six-month period or longer. So, they give you a fairly short window to protect themselves from additional risk.

When should I get pre-approved?

Since there is a shelf-life to pre-approval letters, its best to apply when you are truly ready to buy a home.  This will allow you to make full use of the letter’s duration.

What happens if my pre-approval has expired?

If you haven’t found the home you want within the pre-approval time period, you simply need to ask your lender for another letter. If nothing has changed in your financial situation, it should be very quick and easy. You may need to provide more recent documentation and have your credit pulled again. Some lenders do charge a fee for a pre-approval letter; be sure to check before you give the go ahead.

What’s the difference between pre-approval and being pre-qualified?

Perhaps you’ve heard of getting pre-qualified and are wondering if you should do that instead of getting pre-approved. Pre-qualification gives you just a general idea of whether you can qualify for a home loan and how much you can borrow. There is no documentation or credit check with pre-qualification, so it is all based on verbal information. That makes it less reliable and it is not a guarantee of financing. A pre-qualification letter will not give you the same clout with sellers as a pre-approval letter.

If you have been pre-approved and you have outshopped your letter’s window, don’t worry! All you have to do is ask for another and you can be back out there looking at more homes in no time.

If you’re hoping to buy a home, it’s smart to ponder this question, since even after you receive a lender’s stamp of approval for financing, weeks or even months could pass before you actually buy a house. Will that pre-approval you received a while back still be valid by then?

Since lenders realize that buying a house does take time, pre-approval does have a shelf life, but not an indefinite one. While the length of time varies, in general pre-approval is good for about three months. Here’s what home buyers need to know about how to make the most of this time frame—and what to do if your pre-approval is at risk of running out before you buy a house.

What to know about a mortgage pre-approval? It’s the first step to buying a home

If you want to purchase a home, your first step should be to prove that you have the financial means to do so. This is where pre-approval comes in.

“Pre-approval is the process by which a mortgage professional such as a broker or bank account executive examines a loan application to determine whether a potential home buyer will qualify for a mortgage,” says Matthew Reischer, an attorney and real estate agent at New York’s Flushing Real Estate.

Pre-approval is also key to understanding what your home-buying budget is, adds Michelle Mumoli, CEO of the Mumoli Group at Keller Williams City Life in Jersey City. Since a lender will let you borrow only up to a certain amount, that’s the price range you should stick to when shopping for a house.

How do you get pre-approval?

To obtain pre-approval, buyers need to provide a mortgage lender with information like their employment history, credit score, income, and debts. During this process, the lender will want to see bank statements, pay stubs, and tax returns. It can feel invasive, but lenders are just looking to protect their interests by not loaning money to someone who could be considered high risk. These are people who have high outstanding debts, inconsistent income, or a history of late payments.

Once a lender reviews your finances, it will give you what’s known as a pre-approval letter detailing a good-faith willingness to extend mortgage financing based on its preliminary examination of your assets, income stream, and creditworthiness. The letter will also detail the actual loan amount you qualify for.

How do you use pre-approval?

Real estate agents will submit a pre-approval letter to solidify your offer on a home to the seller, says Mumoli. That’s because most sellers simply won’t accept an offer unless the buyers can prove they can obtain a mortgage. Sellers see a pre-approval letter as evidence that a buyer is not only serious but also has the means to buy the home.

As such, pre-approval is something you need at the very beginning of your home-buying search. It doesn’t make sense to look for properties without first having a pre-approval letter in hand.

Although there is no definite duration for the validity of a pre-approval letter, the custom within the real estate industry is that pre-approval is good for between 90 to 180 days, says Reischer. But many may consider it too old after three months.

The reason? In three months, your financial life can change drastically. You could lose your job, buy a car, or do plenty of things that might affect your home-buying prospects. So, lenders and sellers alike will just have a hard time trusting a pre-approval letter that’s more than a few months old.

Want to know how long your pre-approval is good for? The actual time frame will be on your letter. If you want a longer time frame, ask for that upfront.

What to do if your pre-approval will soon run out

If your pre-approval is about to expire, that doesn’t mean you have to apply from scratch all over again. Just prepare to provide updated financial statements to your lender to prove there’s been no change to your income, debts, or credit scores.

Since pre-approvals do have a shelf life, it’s generally best to not get it until you’re seriously looking for a home. If you’re just window shopping, it may not be worth the trouble unless you want to know what price house you can afford. (But to find a ballpark estimate yourself, you can also enter your info into an online home affordability calculator.)

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