How Long Does a Mortgage Preapproval Last?

What Is a Mortgage Preapproval Letter?

A mortgage preapproval letter is a document indicating you are conditionally approved for a mortgage loan up to a specific amount to buy a house. It usually specifies the type of loan you qualify for and the interest rate the lender would charge you upon completion of a full mortgage application.

While applying for preapproval is a relatively early step in the homebuying process, it's as close as you can get to verifying your eligibility for a mortgage loan without an offer on the table. A mortgage preapproval letter is valuable because it indicates that you're financially ready to buy a home. It can also give you an advantage over other buyers who don't have a preapproval letter of their own.

When Should I Get a Mortgage Preapproval Letter?

It's a good practice to time your preapproval to coincide with when you want to buy a home. If a lender offers a 90-day preapproval letter, for instance, that gives you 90 days to close on a purchase contract.

If you get preapproved too early, you may need to submit additional documentation to get a new letter, which could make sellers hesitant to work with you.

At the same time, you'll want to make sure you receive your preapproval letter before you start looking at homes so you can submit a strong offer as soon as you find what you want. The process can take anywhere from a day to a few weeks, so if you procrastinate, you may lose out to a competing offer.

While it's often foolhardy to attempt to time the mortgage market, it's a good idea to stay informed on changes to current mortgage rates.

How Many Mortgage Preapproval Letters Should I Get?

You only need one preapproval letter to prove you're in good shape to obtain financing. However, it's often a good idea to shop around and compare interest rates, fees and other details offered by multiple lenders.

Consider getting preapproved with three lenders at a minimum so you can improve your odds of getting the best possible loan terms.

How to Get Preapproved for a Mortgage

The preapproval process is relatively straightforward, and you can usually submit your application online.

Follow these steps to obtain a mortgage preapproval letter.

1. Determine Your Budget

Evaluate your budget to figure out how much you can afford to put toward housing costs, including your loan payment, taxes, insurance, maintenance and repairs. You can then use a mortgage calculator to get an estimate of how much you can borrow based on what you can afford.

You can also get prequalified with a lender to find out how much they would be willing to lend to you. Then, you can compare the prequalification amount to your budget to see if you need to make an adjustment.

2. Check Your Credit

You can access your credit reports for free at AnnualCreditReport.com. You can also get your Experian credit report and FICO^® Score^☉ for free anytime through Experian. With these resources, you'll be able to evaluate your credit standing and identify areas where you can make improvements if necessary.

3. Gather Your Financial Documents

Gathering your financial documents—including those related to employment, income and assets—can help your application process go smoothly. Documents lenders typically require include the following:

• Government-issued photo identification
• Social Security card
• Pay stubs
• Bank statements
• Tax returns from the past two years
• Investment statements
• Debt statements
• References from previous landlords
• Rent information
• Gift letters

4. Identify Potential Lenders

Getting prequalified with multiple lenders can help you get a feel for which one aligns best with your plans. You may also choose to work with a mortgage broker who can shop a single application to multiple lenders, so you don't have to do all of the legwork on your own.

5. Submit Preapproval Applications

Getting preapproval from multiple lenders can help you find the loan with the lowest interest rate and fees, potentially saving you thousands of dollars over the life of the loan. The preapproval process may differ slightly from lender to lender, but options may include applying online, in person or over the phone.

6. Obtain Your Preapproval Letter

Once you've supplied all required documents, a preapproval decision could take as little as one day. But it can take longer with some lenders, especially if you don't provide all the necessary documents promptly. Once you receive a preapproval letter, include a copy of it with every offer letter you submit.

What Happens if My Mortgage Preapproval Letter Expires?

The primary reason mortgage preapproval letters have an expiration date is because lenders know that your financial and credit situation can change.

If your letter does expire, you may not need to resubmit a full application because the lender will have everything on file. However, the lender may require updated information about your income, such as new bank statements.

You'll also likely need to undergo another credit check. If things have changed significantly, it could threaten your eligibility.

Does a Mortgage Preapproval Affect Your Credit Score?

When you apply for preapproval, your lender will run a hard inquiry on your credit reports, which can impact your credit score, albeit only slightly.

As long as you keep up with your bills, a ding likely won't last too long. Hard inquiries stop affecting your FICO^® Score after 12 months, though they'll remain on your credit reports for two years.

Fortunately, if you apply for preapprovals with multiple lenders in a short period of time, your credit score won't be negatively affected each time. That's because multiple inquiries made within a short time period and tied to one mortgage loan will have the same effect on your credit as one inquiry, regardless of the number of lenders that process your preapproval.

The Bottom Line

A mortgage preapproval letter can give you a competitive advantage when placing an offer on a home. However, since most approvals last a maximum of 90 days, it makes sense to get your preapproval letter only when you're truly ready to search for a home and make an offer.

As you prepare to buy a home, it's crucial to continue to monitor your credit throughout the mortgage process. This practice can help you keep track of your progress and allow you to quickly take action if something is amiss.