Does a Mortgage Preapproval Expire?

Are you looking to buy a house for the first time? From saving for a down payment to learning about your mortgage options, you may already realize there are many steps in the home buying process. And one of those steps is getting a preapproval for a mortgage.

If you’ve already filled out a mortgage application and received a mortgage loan preapproval letter — congrats! Getting preapproved shows a seller that your financing is in order and you’re serious about purchasing a home. But how do you use that letter and how long are preapprovals on mortgages good for until they expire? Let’s find out.

What Is a Mortgage Preapproval?

A mortgage preapproval is a letter from your mortgage lender that states how much they’re willing to loan you, and it also defines the type of loan they’re offering. After gathering details on the total amount of debt you’re holding and weighing that against your assets and current earnings, they’ll determine how much of a home loan they’re willing to lend you.

You might have heard about a mortgage prequalification — which is different than a preapproval. Mortgage prequalification occurs before preapproval and is more of an estimate of what you can afford when shopping for a home without diving deep into your financial records. Find out more about the difference between a preapproval and prequalification.

Having a mortgage preapproval in-hand puts you on the right path to buying a home — and it tells home sellers you mean business. When applying for a preapproval, lenders will assess your financial health to develop a price range for your home loan they feel you’ll be able to afford. They’ll request these and other financial records from you like:

• Credit reports
• Pay stubs
• Tax records
• Bank accounts
• Credit card debt details
• Student loan debt details
• Other financial obligations
• Records on assets like stocks and bonds
• 401(k) retirement savings records

The loan officer assigned to your request will take a close look at your finances, income, debt, assets and credit history. This will help lenders determine your debt-to-income ratio, which the bank will use to determine how much you’ll be able to afford in mortgage payments each month on the home loan. These details are also used to determine the interest rate you’ll be offered if you decide to apply for a mortgage with that group.

Why Do You Need a Mortgage Preapproval Letter?

Once preapproved for a mortgage, you’ll get a dated letter from the lender that you can show to sellers if you want to place an offer on a home. It will state the loan amounts you’re preapproved for and may highlight the terms and conditions of the loan. What’s the purpose of a preapproval letter? The main benefits include:

• It shows a seller that you have a lender who is willing to work with you
• It validates that you can afford their house
• It’s proof that your finances are in good shape and you likely won’t be denied a mortgage
• It gives you an advantage over other buyers who may be interested but don’t have a preapproval letter
• It can fast-track your mortgage application because the lender’s underwriters will have direct access to your records

How Do You Get a Mortgage Preapproval?

To get a mortgage preapproval, you’ll need to set up a meeting with a lender at a bank or finance company, or you may be able to complete an online application process with a financing company. You’ll want to have the following on hand:

• Social security number
• Driver’s license, passport or state-issued picture ID
• Proof of employment and proof of income/additional income (e.g. recent paystubs, W-2 forms)
• Tax documents (last two years of federal income tax returns)
• Place of residence
• Bank statements
• Other assets
• Real estate records
• Credit information
• Debts
• Monthly expenses

It’s important to note that when your lender checks your credit, they preform what’s called a “hard inquiry.” This can temporarily decrease your credit score, but not by more than a few points, usually. That’s why you can get multiple preapprovals for a mortgage and not severely harm your credit if your applications are delivered within a few weeks of each other.

How Long Does it Take to Get Preapproved?

As long as you have all the proper paperwork available when you apply with your lender, you may be able to get the preapproval the same day. But remember, everyone’s finances are different.

Depending on things like your debt, credit score and other financial hitches, getting preapproved for a mortgage could take longer. Your best bet is to get in touch with your lender before meeting and make sure you have all the necessary paperwork they’ll use.

Understanding how a mortgage preapproval plays a role in the home-buying process can mean the difference between getting the house you want or giving it up to someone who was more prepared! Once you’re ready to seriously begin searching for a home, do your homework on finding a lender and get your preapproval letter in hand.

Does a Preapproval Letter Expire?

Once you have your preapproval letter, you may be wondering how long it lasts. Your income, credit history, interest rate — think about all the different ways your finances can change after you get your letter. For this reason, a mortgage preapproval typically lasts for 60 to 90 days.

Once it expires, you’ll need to connect with your lender again with your updated paperwork and apply for a new preapproval letter. The good news is, this typically doesn’t take too much time since they have most of your information on file. But bear in mind that re-applying requires another hard inquiry on your credit rating, and your credit score can be further impacted.

Want to Learn More About Buying a Home?

From saving for a down payment to what to do after closing, our first-time home buyer's guide walks you through the home buying process.

And don’t forget — another key step to buying a home is properly insuring it. Your mortgage lender may recommend you an insurer, but it’s up to you to find the right provider that best fits your needs — and that’s where we come in! At American Family, you can control what you pay for insurance by customizing a homeowners policy built around you. Reach out today, our agents (Opens in a new tab) are ready to help discuss the best ways to protect your hard-earned dream.