How Long Can You Hold a Preapproval for a Mortgage?

The mortgage preapproval provides you with the financial ability to make an offer to purchase a home.

The mortgage preapproval provides you with the financial ability to make an offer to purchase a home.

Based on your income, monthly expenses, down payment and debt ratio, a lender may offer you a preapproval for a mortgage loan, which includes a dollar amount that you are eligible to borrow for the purchase of a home. Your purchasing power and ability to negotiate with a seller lies within the mortgage preapproval letter, if you intend to finance the purchase price of the home.

Expiration

You can hold a mortgage preapproval letter and use the letter to prove your financial ability to purchase a home until the expiration date of the loan preapproval, which is usually included in the letter. The expiration of a preapproval letter varies by lender. Some lenders allow mortgage preapproval letters to remain effective for 120 or more, while some lenders may guarantee mortgage preapprovals for 30, 60 or 90 days.

Loan Amount

Your preapproval letter will indicate your borrowing power to finance a purchase if a seller accepts your offer. You will need to provide documents demonstrating your income, assets and monthly expenses, such as tax returns and bank statements. Based on the information you provide, the lender will provide you an estimate of your maximum loan amount. This step precedes the underwriting process. If you do not close on the home before the expiration of the preapproval letter and there is a change in your monthly income and debt, the loan amount may change when you reapply for mortgage preapproval.

Interest Rate

The preapproval letter may include an interest rate lock. The mortgage interest rate will remain the same for a specific period of time. The borrower must close on the home purchase within the time frame to take advantage of the interest rate. For example, if the preapproval letter expires after 90 days, upon reapplying for mortgage preapproval with the same lender you may be offered a different rate. Interest rates often change due to changes in the market rate and the borrower’s eligibility for a loan.

Preapproval Extension

In the event you are not able to close on the purchase of a new home, some lenders may offer you an extension of the mortgage loan amount. However, the lender will perform another evaluation of your income, expenses and debt ratio to ensure that there are no changes to your current financial situation.

About the Author

Marie Huntington has been a legal and business writer since 2002 with articles appearing on various websites. She also provides travel-related content online and holds a Juris Doctor from Thomas Cooley Law School.

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