In the mortgage industry, we routinely encounter instances in our day-to-day interactions with clients that make us realize what is obvious to us may not be so obvious to those we serve. As loan advisors, a question we are frequently asked by those shopping for a home and going through the mortgage pre-approval process is, “How long is my pre-approval good for?”
Because there are going to be different answers for each situation and each borrower, the best and most accurate answer to this question will likely always remain, “It depends.” However, there are some general rules and guidelines that apply to most and are helpful in understanding the components that impact the pre-approval, and its expiration.
Credit reports are generally valid for 3 months. If you apply for a mortgage and a lender pulls your credit, you typically have 90 days to shop, get into contract and close. If we need to refresh the report, this is not problematic and does not, in and of itself, lead to a drop in credit scores. So long as you maintain your credit status, a significant change should not be expected as a result of a refreshed report. We can advise and counsel on this aspect once we have the initial credit report in hand.
For those who are salaried or hourly, 30 days’ worth of paystubs constitute standard documentation. We will ask borrowers to provide their most current pay stubs throughout their processes, and in every case we generally need a stub dated within 30 days of the funding of the loan. For the self-employed, updated profit and loss statements (P&L) may be required. However, until the year’s tax returns are filed, “official” income support is not required. Keep in mind that income tax filing deadlines for personal and business tax returns can always trigger an update of the pre-approval. Once a return is filed, that information must be made current in our assessment and approval.
We’ll request updated bank statements once they are available. If activity (such as a deposit of gift funds) occurs between statement issues, we will request a screen shot or print out of account activity to date to document the change since the last statement.
As you can see, a pre-approval is a dynamic document, and there is quite a bit of “live” updating that happens once you’re in process. However, the over-arching answer to the question of how long the pre-approval is valid tends to be three months. Remember that your home search may take some time. Once you find the right home and go into contract, you may then have a 30 or 45-day close of escrow. All of the time adds up and counts in the expiry of the credit report, which is normal and is to be expected. We are prepared to keep an eye on those expiration dates and we’re happy to help you navigate the process, free of additional worry.
To learn more about the pre-approval process, start a conversation with a loan advisor today!