How Long is a Mortgage Pre-Approval Good For?

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Mortgage and Lending with Mason-McDuffie Mortgage, Conventional Loans, Jumbo Loans, FHA, 203(k), USDA, VA, NMLS #138061 MMCD #1141
https://activerain.com/droplet/4fCP

How Long is a Mortgage Pre-Approval Good For?

 

     This is a pretty simple question, but as it is with most things real estate related, the answer is a little bit complicated.  On many pre-approvals I've seen, lenders note that it's good for 60 days.  Others say 30 days.  Others say 90, and some don't even list an expiration.  So what's a borrower to think?

 

     First I'll give the "simple" answer to the question, and if you'd like to see the WHY behind the discrepencies between lenders, you can continue reading.

 

     How long is a mortgage pre-approval good for?  The truth is, it's good for the 30 seconds it was printed, and really beyond that, it's dependent on a lot of variables.  Under normal circumstances, things don't change drastically enough to negate a pre-approval that quickly, but it has happened before.  Programs disappear overnight sometimes.  Pricing on a specific product or across the entire market can skyrocket almost overnight as well, negating a pre-approval for someone with a debt/income ratio near program maximums.  Finally, a borrowers situation can change overnight - jobs are lost and/or changed, incomes fluctuate, and sometimes a credit profile changes enough to nullify a pre-approval.

 

Why do lenders say 30, 60, or 90 days?

     Well, technically speaking, a credit report is valid in mortgage lending for 90 days, so provided no loan programs change, rates are stable, and nothing about the borrower changes, someone should have 90 days to officially apply for a loan from the day a pre-approval is done.

     Some lenders say 60 days because they factor in 30 days to get through the mortgage loan process - so you've got 60 days to find a home with your pre-approval, and another 30 days to get to settlement before you hit the magic number of 90 days before a new credit report is pulled.

     Some lenders say 30 days because...well...marketing?  If you're in the pre-approval process, lenders are scared you're going to shop them, and potentially end up working with someone else.  If you have to check in every 30 days it gives them an opportunity to keep in touch, build rapport, and increase the chances that you'll close with them when you do find a home.

 

What can you do to make sure your pre-approval is of value?

 

     There's not much you can do when it comes to interest rates or programs coming & going, but there are things you can do to make sure your pre-approval means you'll be getting the keys to a new home (as soon as you find one!).  For one, keep your credit in the same (or better) shape as when you applied.  That means not opening or closing accounts, not adding to credit card balances, and not buying new things with credit.  It also means not changing jobs (mid-homebuying process is a terrible time to decide on immediate, full time self-employment), and not moving around assets without checking with your loan officer first. 

 

     Also, be sure you're getting a full pre-approval, and not just a quick, paperwork-free pre-qualification.  If your lender gives you a pre-qualification after a 5 minute phone conversation without requesting any additional information or documentation, it's time to find a new lender.

 

     Here is the minimum paperwork you should have available when getting pre-approved:

 

- Recent income documents (W-2's for the past year, along with a recent paystub reflecting YTD (year to date) income, or previous 2 years tax returns (yes, all schedules) if you're self-employed, proof of Social Security (award letter), asset depletion, or pension income if you're retired.

- Asset documents (all pages for each account) to show funds being used for your purchase and any required reserves

- Most recent 2 years tax returns if you work on bonus or commission income, OR if you own investment properties.

 

     Some lenders may "save you time" by not requiring any documentation up front, or promising a quick pre-qualification over the phone, but they will not be saving you headache when you run into problems down the line. 

 

     So how long is a mortgage pre-approval good for?  If rates, programs, and your financials all stay the same, a pre-approval is good until one of those factors changes, but after 90 days, a new credit report is necessary.

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Re-Blogged 5 times:

Re-Blogged By Re-Blogged At
  1. Amanda Christiansen 04/18/2014 11:51 PM
  2. Paul McFadden 04/18/2014 11:57 PM
  3. Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi 04/19/2014 02:19 AM
  4. Tammie White, Broker 04/19/2014 12:39 PM
  5. Nina Hollander 04/19/2014 10:57 PM
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Rainmaker
1,447,024
Kat Palmiotti
406-270-3667 (MT), 914-419-0270 (NY), Broker in NY with Grand Lux Realty and in MT with (coming soon!) - Kalispell, MT
The House Kat

This is good information -- I have been working with buyers for much longer than three months trying to find the right place, and we are still using the original pre-approvals.  Now I see they could be outdated (I always thought if the pre-approval was 6 months "new" or newer, then it was still good).

Apr 18, 2014 09:41 PM #9
Rainmaker
383,695
Doris Freeman
RE/MAX REALTY SOURCE - Jackson, TN
Broker/Agent, Realtor, Madison-Gibson-Crockett

Even with a pre-approval the lender will  re-order bank statements, etc after about 30 days and the client can't change anything, so I look at both pre-approval and pre-qualifications as only a starting place, no loan is quaranteed until it closes!

Apr 18, 2014 11:17 PM #10
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Amanda Christiansen
Christiansen Group Realty (260)704-0843 - Fort Wayne, IN
Christiansen Group Realty

I love coming to your blog and reading all of the great information you put out there about the mortgage process.  Keep up the great work!

Apr 18, 2014 11:47 PM #11
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Paul McFadden
Paratex - Seattle, WA
Pest Control, Seattle, WA.

John: Good thoughts. I will proably reblog. Thanks!

Apr 18, 2014 11:52 PM #12
Rainmaker
1,379,017
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

John, this is good information! Buyers should realize pre-approval letters are not cast in stone and are subject to change.

Apr 18, 2014 11:54 PM #13
Rainmaker
2,464,264
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

This sheds a light on the commitment to finishing what was started if for no other reason than the docs are only good for XXX amount of time...It helps to stay focused

Apr 19, 2014 12:02 AM #14
Rainmaker
691,171
Pat Champion
Coldwell Banker Camelot Realty - Mount Dora, FL
Call the "CHAMPION" for all your real estate needs

I'm with the first comment no loan is guaranteed until it closes. Thanks for sharing have a Happy Easter.

Apr 19, 2014 01:14 AM #15
Rainmaker
1,943,719
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

John - your blog is full of solid information.  Telling the truth about pre approval and not overselling makes you a great source.

Apr 19, 2014 01:27 AM #16
Rainmaker
1,234,879
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Great post, John!  And regarding a topic that seems to stump many. 

Can't tell you the number of times a client or agent has contacted me wondering if a months old (fill in the large number) pre-approval is still valid and can still be used!  Sure it can ... you can line your garbage can with it!  Funny how the important messages about increasing need for details, documentation, and currentness is overlooked so often ...

Definitely a much-needed message ... so I'm featuring ...

 

Featured in BananaTude!

 

 

Congratulations!  Well Done!

 

Gene

 

 

Apr 19, 2014 01:50 AM #17
Rainmaker
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Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Make this the third person that knows no loan is guaranteed until closed.

Apr 19, 2014 02:29 AM #18
Rainer
355,882
Tom White
Franklin Homes Realty LLC (615) 495-0752 or www.FranklinHomesRealty.com - Franklin, TN
Franklin Homes Realty LLC, Franklin TN

John, this is some great information! I'm bookmarking this, since it comes up all the time, especially with first time buyers.

Apr 19, 2014 03:45 AM #19
Rainmaker
1,501,999
Beth Atalay
Cam Realty and Property Management - Clermont, FL
Cam Realty of Clermont FL

Great, informative post John. Anything and everything could change between the first time a borrower speaks with a lender and day of closing, buyers need to truly understand what it means.

Apr 19, 2014 12:53 PM #20
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Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

30 seconds! Wow!

And in fact, it's true! If someone goes out and buys an expensive car or spends thousands of dollars on furniture for their new home before buying, it's going to be a BIG concern for some.

Apr 19, 2014 01:55 PM #21
Rainmaker
2,772,745
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

patience is a virtue even in real estate

Apr 19, 2014 04:41 PM #22
Rainmaker
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Women of Westchester Working Together
Women of Westchester Working Together - West Harrison, NY
Women helping Women get ahead

John - This post is excellent as it explains what can impact the time and why different places may be giving different time frames.

Apr 19, 2014 08:31 PM #23
Rainmaker
3,132,348
Nina Hollander
Coldwell Banker Residential Brokerage - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

Great post... so often I have people who try to give me a pre-approval letter that's a year old! They really don't understand why they need a more recent letter very often.

Apr 19, 2014 10:52 PM #24
Rainmaker
1,560,731
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

I often ask to see the pre-approval and the first thing I look for is the date.  There was one transaction where the sale was closing out the end of the month, but the pre-approval was only good until the middle of the month.  YIKES!  Not my transaction, but a colleague of mine.

Apr 20, 2014 04:19 AM #25
Ambassador
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John Meussner
Mason-McDuffie Mortgage, Conventional Loans, Jumbo Loans, FHA, 203(k), USDA, VA, - Walnut Creek, CA
#MortgageMadeEasy Walnut Creek, CA 484-680-4852

Carla - good job reading the details, usually it's not an issue but definitely warrants a call to the lender.

Nina - thank you, and wow!  A year is a little crazy, I make sure everyone knows how the terms of a preapproval can change, and that after 90 days we'll need new credit.  A LOT can happen in a year!

WoWC- thanks for commenting, it is probably confusing for consumers to see different dates from different lenders.

Laura-  so very true, thanks for the comment.

Praful - thank you for stopping by and YES, a big purchase can kill a deal and many people don't realize it.

Beth - thank you, and yes, letting buyers know what to do & what not to do is so important to getting to the closing table with no issues.

Tom - thanks a lot, glad you think enough of it to share w/clients.

Tim - so very true.  I can't relax until after settlement for that very reason.

Gene - thanks so much for the feature.  It is just a small detail but can play such a huge role in a seamless transaction.

Grant - thank you.  Preapprovals are necessary and important, but if something changes, they can turn to worthless pretty quickly.

Pat - thank you, I hope you had a great Easter, I sure did.

Richie - another good point, having a deadline can give everyone something to strive to stay ahead of.  Thanks for the comment.

Michael - thanks for stopping by, and buyers should certainly know that a pre-approval is only good for current terms.

Paul - thank you, glad you think enough of the post to share it.

Jared - thanks for the kind words, glad you enjoy the info.

Doris - absolutely right, preapproval is the first step but there's a whole lot more guidance needed to make it to settlement.

Kat - glad you found the info beneficial.  If nothing has changed with your buyers credit, debts, jobs, or loan programs, you're probably OK, but it's good to know a new credit report will need to be pulled prior to officially starting their mortgage process.

Greg - whew!  Glad you're still able to make it work, but yes, those situations can be scary, even something as small as a credit limit being reduced or rate being increased can jeopardize a deal.

Mark - I like that approach.  I think I'm going to switch it up to a regular pre-approval while letting the buyer & their agent know to ask for a property specific one when they find a home.

Joe - thanks for the comment.  90 days is very reasonable, especially if nothing changes between application & finding a home.

Joan - thank you, and yes, lots to keep an eye out for throughout the process.  It's nice to find potential issues & address them with buyers BEFORE they become a problem.

David - exactly.  You can use your preapproval forever as long as everything stays exactly the same! Thanks for the comment.

Apr 21, 2014 02:59 AM #26
Rainmaker
4,432,217
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Thank you for the information. I will boookmark this and share it with others.

Apr 21, 2014 05:48 AM #27
Rainmaker
1,312,524
Wayne and Jean Marie Zuhl
Samsel & Associates - Clark, NJ
The Last Names You'll Ever Need in Real Estate

Hi John,

Great info!  We just had to have a buyer (on one of our listings) send us a new pre-approval because there's was expired in February.  Thankfully they got a new one and that deal is moving along.

Apr 23, 2014 06:22 AM #28
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