Do Mortgage Preapprovals Expire? If So, When?
Ashley Kilroy5-minute read
October 18, 2021
As part of the home buying process, you’ll have to get preapproved for a mortgage. Once you find a lender that you trust and that gives you a preapproval letter, you’ll be able to put an offer in on a home. But how long is a mortgage preapproval good for?
Depending on the lender, your credit and other factors, a mortgage preapproval will usually last a few months. However, it’s essential to understand the approval process and your options before buying a home.
What Is A Mortgage Preapproval?
A mortgage preapproval is a process of determining how much a person can borrow to buy a home. Lenders look at your income, assets, liabilities and credit score to determine the loan amount and mortgage rate you’ll receive.
Getting preapproved is beneficial to home buyers because they’ll know how much money they can spend on their new house. Preapprovals also make it easier to shop for a home and can strengthen your bid when you put in an offer.
If you’re house shopping in a competitive market, and two people submit an offer on a home but only one has preapproval, the preapproved offer will likely be accepted because the homeowners will know that the buyer has the means to purchase their house.
Preapproval also gives you time to sort out your financial documents beforehand. That means you’ve done the bulk of the mortgage process upfront, so you’ll only have to focus on closing once you put in an offer.
It’s wise to understand the difference between a mortgage preapproval and a prequalification. A prequalification essentially states that you will qualify for a mortgage but might not give an accurate representation of how much you will be approved for or what your interest rate will be. That’s because a mortgage prequalification does not use your credit report. Without your report, a lender can only estimate what you will be approved for.
What Is A Mortgage Preapproval Letter?
Once approved, your lender will give you a preapproval letter, which lists out your mortgage amount, interest rate and additional details of the loan. The letter is vital for a few reasons. First, real estate agents usually ask to see your preapproval letter before they show you houses. Knowing that you are preapproved will help your agent understand your budget and assure them that you are serious about purchasing a home.
Second, a preapproval letter is something you can share with the seller to prove that your offer is legitimate. It will show that you probably won’t have any problems getting a mortgage if your bid is accepted.
How Long Does It Take to Get Preapproved For A Mortgage?
No matter if you get preapproved through Rocket Mortgage®, a national bank or a local firm, the steps to getting preapproved are simple. First, you’ll need to submit a mortgage application. Typically, the lender will then run a check on your credit history and ask you a series of questions about your financial standing and the home you want to buy.
They’ll check your income and assets and analyze your most recent bank statements. Lenders want to ensure that you can pay back the mortgage loan, so they’ll look for any financial red flags like outstanding credit card debt or unpaid medical bills.
After completing the approval process, you’ll receive a letter. If you applied with Rocket Mortgage, you’ll be in contact with a banker to get a Verified Approval Letter.1. To be “verified,” you must submit additional documents like tax returns and pay stubs along with the application.
Once you choose a mortgage lender to work with, the whole process can take as little as a few minutes over the phone. Be sure to have your Social Security number and other necessary information handy so that they can quickly run a credit check.
How Long Does A Preapproval Last?
The time a mortgage preapproval is valid before expiring can vary depending on your lender. In most cases, it lasts for around 60 to 90 days. Your financial situation can change substantially within a few months and many lenders aren’t willing to take the risk of their agreement with a prospective borrower falling through beyond the 90-day mark.
It can be a good thing for a borrower’s financial situation to change. For example, upon their first preapproval, they may have learned that they have a low credit score. If they lower their debt-to-income ratio and take other steps toward increasing their score, the borrower could receive a lower rate on their next mortgage preapproval.
Alternatively, credit scores could go down, debt could increase or some other impact on their ability to make mortgage payments, affecting their likelihood of moving forward in the loan process. In that case, they may receive a higher interest rate or smaller loan amount for their preapproval. Or, possibly not qualify at all if the negative changes are impactful.
Some people’s financial situations don’t change, but they haven’t purchased a house, so their mortgage preapproval expires. They will still need to get a new preapproval letter. If your letter has expired, you’ll have to find a new lender or reapply to the same one.
How Many Preapproval Letters Should You Get?
While you can get multiple preapproval letters, it can be harmful to your credit score. Since lenders run a credit check to make a letter, it creates a hard inquiry on your credit report. A hard inquiry can decrease your credit score by several points, and too many inquiries can be a red flag to future lenders.
There is a grace period, however. If you apply for preapproval with multiple mortgage lenders in 14 days or less, it will show up only as one hard credit pull on your credit report. So, when you’re shopping around, don’t wait several weeks between applications. Do them all at once to lessen the impact on your credit score.
When Should You Apply For Mortgage Preapproval?
A mortgage preapproval is one of the first and most essential steps toward buying a home. It’s wise to understand how much house you can afford before you start shopping. Therefore, you’ll want to get preapproved for a mortgage as you start seriously looking at homes.
A borrower should apply for a mortgage preapproval when they are actively in the home buying process, but not so far in advance that they risk their preapproval expiring. If you are unsure if you should get a mortgage preapproval letter, you may want to have a conversation with your real estate agent.
The Bottom Line
Most mortgage preapproval letters last between 60 – 90 days. Your mortgage preapproval will list how much you are approved to borrow, your interest rate and other terms and conditions.
Typically, borrowers should wait until they are ready to actively search for a home before they get preapproved. This will ensure that their preapproval letter does not expire and that they can confidently bid on their future home.
Purchasing a home is an exciting venture. If you are unsure when you should apply for preapproval or have other questions about the home buying process, it’s wise to talk to a Home Loan Expert at Rocket Mortgage. They’ll be able to answer any of your questions and help guide you along the way.
1Participation in the Verified Approval program is based on an underwriter’s comprehensive analysis of your credit, income, employment status, debt, property, insurance, appraisal and a satisfactory title report/search. If new information materially changes the underwriting decision resulting in a denial of your credit request, if the loan fails to close for a reason outside of Rocket Mortgage’ control, or if you no longer want to proceed with the loan, your participation in the program will be discontinued. If your eligibility in the program does not change and your mortgage loan does not close, you will receive $1,000. This offer does not apply to new purchase loans submitted to Rocket Mortgage through a mortgage broker. Additional conditions or exclusions may apply.
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