How Long Does A Mortgage Pre-Approval Last?
A Pre-approval usually lasts up to 120 days in most situations but technically the length of time a pre-approval is valid varies per lender. The credit report typically doesn’t expire for 120 days and doesn’t need to be re-pulled or the credit re-evaluated until that length of time has passed. However, income and asset documents expire after 30 days and more recent documents will need to be provided once that length of time has passed.
Keep in mind, any changes to the overall profile of the borrower, can either improve or void the pre-approval. For example, a borrower may have discovered that they have a low credit score during their initial pre-approval. During the mortgage process, the borrower could qualify for a lower rate if they reduce their debt-to-income ratio or take other efforts to improve their credit score. In order for the rate improvement to take place, the positive changes would have to occur at least two weeks prior to closing. This will allow the Lender time to order an updated credit report to verify the positive changes.
Alternatively, if new debt is obtained, there are missed payments or assets change, the pre-approval could be in jeopardy. In that instance, the pre-approval may come with a higher interest rate or a smaller loan amount or, if the negative changes are significant, you may not qualify at all.
If nothing has changed on the application or the overall credit profile and the credit has expired, only a new credit report will be required and a new pre-approval can be issued. But, new income and asset documents are required every 30 days.
How Far In Advance Should I Get Pre-Approved For A Mortgage?
The best time to be preapproved is before selecting a Realtor and before starting the home search process. A pre-approval from an experienced Lender will answer many of the questions you have when searching for a house. Before the home search starts, you will need to know your credit score (not what is listed on Credit Karma), in what price range you should be looking, the down payment required, approximate payments, and many other important factors required in your search. Additionally, if there are any potential roadblocks to your pre-approval, such as excessive debt or a low credit score, they can be addressed before it is too late. So, start the pre-approval process at least 30 days prior (more if you have questions about your credit) to starting your home search.
After obtaining a pre-approval, then it is a good idea to locate a Realtor you would like to work with. In this incredibly competitive market, no Realtor will work with any clients without the pre-approval letter. If you don’t know any Realtors, ask your Loan Officer for a recommendation.
It’s also worth noting that a pre-approval is not the same as final approval. Even if a loan officer has pre-approved you, you can still be turned down for a mortgage. Make sure there are no significant changes with your job, income or assets during this time.
Can A Mortgage Pre-Approval Be Extended?
The lender determines whether or not you are pre-approved for a mortgage. You’ll usually be approved for up to 120 days, giving you plenty of time to find a home. If the required time frame has expired, most lenders will grant you a pre-approval extension. However, you may need to submit documents again and rates may have changed during that time.
If your financial condition changes, this is could be a problem. A pre-approval for a mortgage is dependent on your financial situation at the time it is issued. Your mortgage pre-approval may be cancelled if you make significant changes after receiving it, such as changing employment, buying a car, taking out a new loan, or getting divorced.
This is true even if your mortgage has been approved in its entirety. So wait until your mortgage is paid off before making any major alterations or purchases.
What If Pre-Approval Expires?
As discussed above, if the allowable time has lapsed, you will need to contact your lender again with your revised information and ask for a new preapproval letter after it expires. The good news is that because the lender has most of your information on file, the process usually doesn’t take long.
Borrowers should typically wait until they are ready to actively look for a home before becoming pre-approved unless there are potential issues with credit score or income. As long as the borrower is confident in their approvability, 30 days in advance is sufficient. This should allow plenty of time to search for a house and not have the pre-approval expire.
Buying a house is an exciting and stressful situation, especially if the client has never gone through the process. If you’re unsure when to apply for preapproval or have other questions about the home-buying process, it’s a good idea to speak with a home loan professional who can answer your questions and guide you through the process.
How Many Times Can You Get Pre-Approved For A Mortgage?
You can do it as many times as you want. However, if you are getting pre-approved with multiple lenders, it can be confusing and potentially affect your credit score. A hard credit inquiry is created on your credit report when a lender runs a credit check to issue a letter. When one lender pulls your credit report, there is little to no impact on the credit score. However, if there are multiple inquiries spread out over a few months, there can be a decrease in your credit score.
However, there is a grace period. If you apply for pre-approval with different mortgage lenders in less than 14 days, your credit report won’t be impacted negatively. So, if you’re looking to get pre-approved, don’t wait weeks between applications. To reduce the impact on your credit score, complete them all at once.
For additional information or to have a conversation regarding pre-approved mortgages, call The Cain Mortgage Team at 803 261 9267!
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