How Long is Mortgage Pre-Approval Good For?

How long is AZ mortgage approval good for

How long is an AZ mortgage approval valid?

The best thing an Arizona home-buyer looking to buy their dream home can do is get pre-approved for a home loan before starting their home search.  Getting pre-approved early gives buyers several advantages including:

  1. Buyer knows what price range they qualify for
  2. Buyer uncovers any hidden surprises before being financially committed (earnest money etc…

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How Long is Your Arizona Home Loan Pre-Approval Good For?

What happens when a buyer gets pre-approved but does not find a home for 1, 2 or even 3 + months?   Is their original pre-approval and pre-qualification form still good?  When does the original pre-approval expire?   Let’s jump in and explore how long a mortgage pre-approval is good for in the Phoenix area.

Mortgage pre-approval is technically good for 90 days from the date that a loan applicant’s credit report is generated.  This is a standard one size fits all answer to “how long is a pre-approval good for.”  It is based solely on the validity period of a credit report.  Credit reports are valid for 90 to 120 days (depending loan type – FHA, VA, USDA, Conventional or JUMBO).   However, when considering the life of a mortgage pre-approval, the only element that an AZ mortgage lender can set a time limit on is in fact the applicant’s credit report.  The rest of the information that goes into a pre-qualification has a much shorter shelf life.

To make more sense of this you want to consider the main components of an AZ Mortgage Pre-Approval.  A lender considers:

  1. Borrower’s Income
  2. Borrower’s Assets
  3. Borrower’s Employment

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When to Re-verify Your Application Information with Lender?

Many lenders state that a home loan pre-approval is “good for” 90 days. A pre-approval is only “good” if a borrowers income, assets and employment remain the same as they were when the borrower completed a loan application.  This is an important detail to consider when searching for a home.  An AZ mortgage company can use the credit report they pulled for 90 days on an FHA/VA/USDA loan and for 120 days on a Conventional loan.   All other information (income, assets etc…) needs to be updated by the borrower providing the more recent documentation (pay-stubs, bank statements etc…) once they enter into a purchase contract on a property.

If a buyer goes under contract and has a closing date that exceeds either the 90 day or 120 day credit report time-frame listed above, a new valid credit report will need to be generated by their AZ mortgage lender.  If a borrower’s credit data has changed (including but not limited to their credit score) their mortgage qualification may also change as a result.  If any of the information related to income/assets/employment changes after an initial loan application and prior to a buyer’s closing date the original pre-approval is no longer valid.  Mortgage qualification is based on the most recent/current income and asset information available.

When To Pull a New Credit Report?

When should  an Arizona mortgage lender “re-pull” an applicant’s credit report?  My advice is to pull a new credit report (when a new report is actually required) as early as possible if you and your mortgage lender know your initial credit report (pulled for pre-approval) will expire prior to your closing date.  Pulling a new report (when applicable) reveals any new credit related challenges early.  When it comes to credit challenges sooner is absolutely better.  A lower credit score, a late payment, an unknown judgment/lien can all pop up unexpectedly.  All of these can significantly impact an existing mortgage approval based on an out of date credit report.   The sooner a Phoenix area loan officer knows about new credit issues the more time they have to help a buyer resolve them.

The flip side to pulling a fresh credit report early is waiting until the last minute.  Imagine re-pulling a credit report just two days before closing and a new collection shows up dropping the buyer’s credit score 65 points.   With only 2 days left until closing, the buyer would be left to scramble to try and remedy the situation.  If the borrower ends up being stuck with the new low score issues arise.  In many cases a lower credit score results in a higher interest rate and/or higher closing costs.  When the lender and the buyer know about credit issues early they have time to find solutions.  This extra time allows the buyer to avoid an increase in interest rate and/or closing costs.

Mortgage Pre-Approval is very important when shopping for a new home.  Getting pre-approval is the first step any Phoenix area home-buyer should take.  Keeping a pre-approval fresh and up to date will not only prevent costly surprises from popping up, it will also tell sellers that your approval is up to date and reliable.  If you have any questions about getting qualified please do not hesitate to call me.

By Jeremy house

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