How Long Is a Mortgage Pre-Approval Good For?
You’re ready to take the plunge and buy a house. However, before you do, you’ll need to be positive that all of your finances are in order. To be pre-approved for a mortgage, you’ll have to have an idea of what you want to spend, have sufficient income to cover the monthly mortgage, and your credit score will need to be high enough to be approved for the loan. If you’re not sure about any of these areas and how they pertain to your pre-approval, you might need to take a step back before you decide to make an offer. Here’s what you need to know in order to be fully ready to buy a house.
How Long Pre-Approval Lasts
Making the decision to buy a home is a huge step for anyone. You’ll want to weigh out all of your options before you choose just one house to make an offer on. You don’t want to be pressed for time when you’re making such a serious choice. When it comes down to it, mortgage pre-approval lasts anywhere from 45 to 90 days. This will be the window you have in order to purchase a home at the rate you discuss with your lender.
Make sure that you ask your lender exactly what their policy is on pre-approvals. You don’t want to go into the process thinking that you have three months to look for a house when you actually only have a month and a half. Start these conversations with your lender early just so you can get a feel for how everything will work. It’s likely that your lender will disclose all of this information to you during the process of pre-approval anyway, but it’s never a bad idea to check ahead of time just to be prepared.
How to Time Your Pre-Approval Perfectly
What’s more, you’ll want to time your pre-approval appropriately. There is a chance that when you ask for a pre-approval, your bank could come back and say that you weren’t approved. They will tell you why you haven’t been approved, but often times hopeful homebuyers will have a few areas of their finances to work out before they can get that final stamp of approval.
As such, it’s not a bad idea to get two pre-approvals. The first pre-approval will act as a preliminary check of your finances. The bank will tell you what areas could be improved, such as your income, credit score, or down payment. You can then start getting in the optimal financial zone, which may take months or possibly even a year or two. Its truly worth working for if you want to purchase the house of your dreams.
In addition, if you space out your pre-approvals in this way, you won’t notice any difference in your credit score. Your pre-approval will appear on your credit history, but it won’t move very much, if at all. The only time that you could see a change in your score is if you’re reapplying for pre-approval frequently. It’s best to stick to a preliminary check and then one final check before you’re ready to buy.
When to Get Pre-Approved for a Mortgage
In a perfect world, you would not apply for pre-approval until you’re ready to make an offer on a house. However, not all of us are certain of what our entire financial portfolio looks like through the eyes of a bank. As such, many home hunters choose to become pre approved for a loan as a preliminary step in order to figure out where they stand, and realistically how close they are to buying a home.
How to Have a Preliminary Check of Your Finances
For example, after applying for pre-approval, the bank may come back to you and tell you that you need to work on improving your credit score for about six months or so and then reapply. They will help you understand what areas of your finances might need a bit of refining before you can be approved for the loan you really want. These are good discussions to be having with your lender so that you’re fully prepared for what you’re committing to. Your lender will explain all the details of your loan including where your credit needs to be, how much your monthly mortgage will cost, and what your interest rate will look like.
Talking it over with your lender before you ever think about putting an offer on a house can help you get each of these areas in perfect shape to be approved for the mortgage you’re looking for. This process can be initiated a few months in advance. If you’re pretty sure that you’ve got everything in order, you can do a check two to four months in advance just to make sure. If you think you might need to do some work on your finances, try starting about six months early.
How to Know When You’re Ready to Buy
After you’ve had a preliminary check, you will know what areas of your finances need work. Focus on making a checklist of everything that needs fixing and get started right away. Once you’ve got everything on your list accomplished, it’s time to think about reapplying. Before you do, make sure that you’ve left no questions unanswered. You should know how big of a mortgage you can afford, what area you’ll be looking for houses in, and you should scout a few houses ahead of time (or at least research them online) to get an idea of what you like and don’t like.
Now, you should really feel prepared to put down an offer on a house. It’s finally time to talk to your lender about applying for pre-approval for the last time. Once you finish the pre-approval process, you can actively start looking for houses. Remember, you’ve only got that 45 to 90 day window in order to keep your current pre-approved status. After that time, your pre-approval may run out and you’ll have to apply again. So, this time around, you should make sure that you’re absolutely ready to put down an offer on a house within that time frame.
The pre-approval process can feel like a lengthy one, especially when you’re ready to buy a house fast. However, it truly is worth the hassle to be able to know that the bank will support your homebuying decisions. After pre-approval, you’ll know exactly how much you’re looking to spend, what your monthly mortgage will look like, and how much time you have to put in an offer. Knowing all of this information beforehand can help you make educated, confident choices when the time comes to buy the house you’ve been looking for.
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Trisha is a writer and blogger from Boise, ID. She is a dedicated vegan, an avid gamer, cat lover, and amateur SFX artist.
This post was updated November 30, 2017. It was originally published December 3, 2017.