Liz Kroft | October 22, 2023
A mortgage pre-approval letter is your key to securing a dream home. But how long does this golden ticket last? In this guide, we'll dive into the world of mortgage pre-approval, providing insights to help you navigate the homebuying process.
So, what is mortgage pre-approval? It's the process by which a lender assesses how much they're willing to lend you for your home purchase. The outcome is presented in a pre-approval letter, a document that acts as a well-researched evaluation of your creditworthiness. It's not an absolute guarantee, but rather a reliable estimate of your borrowing capacity.
Before we continue, let's clarify the difference between "pre-approval" and "pre-qualification." Pre-qualification offers a rough idea of your budget. Pre-approval dives deeper into your financial and credit history to provide a more accurate borrowing estimate.
The pre-approval journey typically includes these steps:
Is pre-approval necessary for buying a home? Technically, no, but it can be a game-changer.
The pre-approval process delves into your financial situation, including:
This evaluation shapes crucial aspects like your loan amount, mortgage term, and interest rate.
Typically, mortgage pre-approval lasts up to 90 days. Many lenders specify the expiration date on the pre-approval letter, ranging from 30 to 90 days. It's vital to apply for pre-approval when you're ready to commit, as changes in your finances can impact the validity of your pre-approved loan.
If your pre-approval nears its expiration date without securing a home, you can request an extension. Keep in mind that the pre-approval process involves a hard credit inquiry, which can temporarily lower your credit score. To minimize this impact, apply for pre-approval from multiple lenders within a 15 to 30-day window, as many credit bureaus treat them as a single inquiry.
Several factors affect how long pre-approval lasts:
If your home search extends beyond the pre-approval period, you can apply for an extension or renewal. Reasons might include ongoing house hunting, financial reviews, or unexpected delays.
Renewing your pre-approval involves submitting updated financial documentation and undergoing another hard credit inquiry. The process is quick and minimally impacts your credit score.
When ready to commit to buying a home, seek out a lender that aligns with your needs and budget. At Sol Property Advisors, we specialize in connecting homebuyers with the right lenders and loan programs. We're here to help turn your homeownership dreams into reality. Get in touch with us today!
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