How Long Is Mortgage Pre-Approval Good For?

Mortgage pre-approval is one of the most important steps in the home-buying process. Getting pre-approved before beginning to house hunt gives potential homebuyers several advantages that include finding out if they’re financially capable of purchasing a home, determining the price range of the homes they can afford, and putting them in a better negotiating position.

While the advantages of getting pre-approved for a mortgage cannot be denied, one essential aspect is to know what happens when a buyer is unable to find a home soon enough after pre-approval. Let’s find out.

How Long Is the Pre-approval Letter Good For?

The validity period of mortgage pre-approvals can vary greatly among lenders. In general, mortgage brokers make pre-approval letters valid for a period of time that ranges between 45 and 90 days. As pre-approvals expire after a certain point, prospective homebuyers should get pre-approved for a mortgage only when they’re ready to start looking for a piece of property.

Assuming that a homebuyer doesn’t find a home until his or her mortgage pre-approval expires, he or she can ask for an updated pre-approval letter from the mortgage broker. If the credit situation of the applicant has changed, he or she will most probably need to go through the pre-approval process once again. If the mortgage broker rejects the application, all is not lost as the person might get pre-approved by another creditor.

Why Is the Validity of Pre-approval Letters Important?

Pre-approval letters have a good-through date on them, after which they’re no longer valid. The main reason why they expire is that mortgage brokers need the most updated information about the current salary, assets, and debt of applicants in order to issue the mortgage. As conditional agreements, therefore, mortgage pre-approvals are good as long as the terms, conditions and financial situation of the applicant don’t change.

As an example, if the interest rates rise, the underwriting requirements become stricter, or the applicant takes out any new loans, he or she can qualify for a lower mortgage amount or, in the worst-case scenario, the application might get rejected, even if the pre-approval letter is still valid.

To make sure that the applicant still qualifies for the mortgage amount and interest rate offered, the mortgage broker will require a new credit report in order to compare the previous balance to the new one several days before the closing.

Conversely, if the situation changes for the better, such as when an applicant pays off debt, receives a promotion or changes jobs for a higher salary, he or she should inform the mortgage broker right away and require a new pre-approval letter. Conditions that improve the financial capacity of a potential borrower will translate into a lower loan-to-value ratio, allowing him or her to qualify for a larger mortgage and/or a lower interest rate.

If you intend to purchase, build or refinance a piece of property here in North Florida and start your mortgage pre-approval process now, please contact North Florida Mortgage today. Our qualified professionals have many years of experience in mortgage lending and are dedicated to providing a high level of personal service in order to help you get a mortgage that meets your specific needs.

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