August 10th, 2017 5:35 AM by Jackie A. Graves, President
If you want to show sellers you're seriously interested in
buying their home, getting mortgage
pre-approval is a critical first step. It proves that, after
digging through your financials, a lender is willing to give you money to buy a
pre-approved is a great way to differentiate yourself when making an
offer," says Linda Walters, a
Realtor® in Wayne, PA.
a pre-approval isn't a one-and-done process. In fact, if your home search drags
on for several months, there's a chance your pre-approval won't be
valid after a certain point. Let's explore how long a pre-approval letter
remains valid and what to do if yours expires before you find a house.
important to understand that pre-approval is different from pre-qualification.
get pre-approval, the lender will review your financial information such
as bank statements, pay stubs, W-2s or 1099s, a year or two of your tax
returns, and your credit report. Once the numbers are crunched, the lender will
provide you with a pre-approval letter certifying you are qualified to borrow a
certain amount of money at a certain interest rate. Pre-approval does not lock
you into a deal with a lender; in fact, it's wise to speak to a couple of
lenders before signing a mortgage.
flip side, getting pre-qualified for a loan is much less of a financial
deep-dive. The lender simply estimates what you'd probably qualify for based on
information you provide about your income, debts, and assets.
It's good information to have if you're not sure you can get a mortgage, but it
doesn't mean as much to sellers as pre-approval does.
Why mortgage pre-approval matters
you want to purchase a home, you will have to demonstrate that you are
financially able to buy it," says Cathy Baumbusch, a Realtor
in Alexandria, VA. "It doesn't make sense to look for properties to
purchase without first knowing what price range you qualify for and are able to
purchase," she says.
are in a competitive market, a pre-approval letter is often needed for your
offer to be taken seriously.
How long does your mortgage pre-approval last?
varies from lender to lender, but mortgage pre-approval is typically valid for
about 90 days, according to Baumbusch. Your letter will have a date on it,
after which it is no longer valid.
reason pre-approval letters "expire" is because banks need the most
up-to-date information about your salary, assets, and debts. Three months is
long enough that you could have left a job, taken on new debts, or spent what
was previously in your bank account.
fact, even if you're pre-approved, most lenders will want an updated set of pay
stubs and bank statements around the time of closing. Hey, nobody ever
said getting a mortgage was easy!
What do you do if your mortgage pre-approval has expired?
you're still house hunting past the expiration date on your pre-approval
letter, you just need to get another one. If you go to the same lender, it
"can be updated by reverification of your financial documents,"
says Sheree Landerman, a Realtor in Farmington, CT.
will need to provide updated pay stubs and bank statements, but if nothing
major has changed in your financial world, it should be no problem to get a
fresh pre-approval letter from your lender.
By Audrey Ference - To
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