Last market hits the finish line! A final update for HSH's Home Price Recovery Index.

Last market hits the finish line! A final update for HSH's Home Price Recovery Index.

How long is a mortgage preapproval good for?

Since a preapproval letter is a conditional agreement of how much house you can afford, your mortgage preapproval is only good as long as the terms in the preapproval letter do not change. For example, your preapproval letter states that you qualify for given loan amount at a given interest rate. If mortgage rates rise, you will qualify for less; if mortgage rates fall, you can qualify for more.

But since mortgage rates change daily, even hourly, lenders often make the preapproval letter valid for a given period of time, sometimes up to 90 days.

“In my experience, says Keith Gumbinger, vice president of HSH.com, "preapproval letters are usually valid between 45 and 60 days.”

If the conditional commitment period has expired, but you haven’t found a home you want to buy, you’ll want to get an updated preapproval letter from the lender. This may or may not require going back though the process again to produced updated figures, but it might if your credit or debt situation has changed.

When should I get preapproved?

Peter Boyle, a senior loan originator at Summit Mortgage Corporation in Plymouth, Minnesota, recommends discussing financing with a mortgage lender about four months before you start actively looking for a home.

"If you apply for a loan early you have an opportunity to work on things that need to be changed or shored up without a gun to your head," says Boyle.

Preapproval timeline

Can I lock in my preapproved mortgage rate?

In some cases, you can lock in your preapproved mortgage rate. Some (but not all) lenders offer what are generally called “Lock and Shop” approval programs, where you obtain a preapproval and lock in the interest rate and then go shopping for a house to buy. In addition to the typical preapproval process, the lender will generally require a 1 percent deposit to lock the interest rate, which is a typical fee to lock in a rate. This rate lock will usually be good only as long as the conditional commitment period. If you have a house in mind and think you have a good shot at actually buying it, you might consider locking in the rate to remove the uncertainty of how a change in rates might alter your ability to complete the transaction.

If you don’t have a property lined up but want to lock the rate anyway, you need to ask the lender what will happen to the deposit if the conditional commitment period ends. Does it remain a deposit, one you can apply toward the next preapproval period, and ultimately available to use toward closing costs once a loan is in process, or does it become an actual, non-refundable fee (one the lender keeps) once the conditional commitment period comes to a close? 

In short, you’ll want to be certain what the terms and conditions are of both the preapproval and rate lock agreement before you sign on for them.

(Image: QuinStreet)

Preapproval Resources

Add to Homescreen?
Install this web app on your phone :tap and then Add to homescreen