A pre-approval letter for a mortgage loan typically lasts 60 to 90 days. Once your lender has assessed your mortgage loan eligibility, they will draft your pre-approval letter within a few days.
There’s an expiration date to mortgage pre-approvals because a lot can change for an individual financially in a matter of months. (Your credit score may go up or down, or you may take on new debt or pay it off.) If your situation changes or your pre-approval expires before you buy a home, be sure to let your lender know as soon as possible. They can issue a revised pre-approval letter if needed.
You may be eager to begin touring homes, but before you start there’s one essential item you’ll need – a pre-approval letter, a critical document in the homebuying process.
A mortgage preapproval letter demonstrates that a mortgage lender has reviewed your financial information and has decided whether you could be approved for a mortgage (home loan), and for how much.
Pre-approval letters are based on a few basic pieces of information about your financial situation. These include key things like your personal income, proof of assets, credit score, proof of employment, and any other documentation that the lender may need to get an accurate picture of your finances. We’ll go over what lenders are looking for when they review these documents later in this post.
If you're not making a cash offer, a getting pre-approved for a mortgage is not only integral to you as the homebuyer, but it also has significance to the home sellers and agents you'll encounter during the process.
Many real estate agents require their clients to get a mortgage pre-approval letter before house hunting so they know your budget and can better narrow down your home search to fit your current price range, criteria, and potential loan amount.
Before you start browsing listings or start interviewing real estate agents to help you find the perfect home, serious homebuyers should consider first talking to a mortgage lender.
Another benefit of meeting with the mortgage lender before shopping for homes is that you’ll get a clear picture of your purchasing power — how much you can afford — based on current mortgage rates and your financial situation.
Additionally, having a pre-approval will come in handy when you’re ready to start making offers on homes. By including your pre-approval letter with your offer letter, you’ll show sellers that you’re a serious homebuyer who has all their financing ready to go.
Prospective homebuyers should aim to get a preapproval letter before they start touring homes, and ideally whenever they become serious about buying. You should not get pre-approved months (or years) in advance of that, since the preapproval letters have a time-limit and will only last three months at most. (If your preapproval expires, reach out to your lender to see if they can reissue a new letter.)
Most homebuyers rely on immediate and extended family or friends and co-workers for referrals on a trustworthy mortgage lender. While this can be an optimal starting point, it’s also good to shop around until you find a lender that offers the best mortgage option for your personal and financial goals.
With your pre-approval in hand, you can also start to research neighborhoods with homes in your price point. Now is also a great time to go over the different loan types that each lender can offer. These early conversations will help you determine if this is the right lender to complete your final mortgage application with once you’ve found your dream home.
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