Can you get preapproved for a mortgage multiple times?
You bet! You can get preapproved for a home loan as often as you need.
Every preapproval letter comes with an expiration date. And, once the preapproval has expired, you’ll need a fresh one to continue house hunting and making offers.
In today’s hot real estate market, where house hunting can take many months, it’s quite common to need multiple preapprovals. And you should be sure to stay current because you’ll need a valid letter in hand when you find the home you want.
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How long does a preapproval last?
Each lender decides how long its preapproval will last. Usually, preapproval letters are good for 30, 45, or 60 days. A few lenders used to have 90-day expiration dates and you might still find one, though that’s less common now.
“The reason for this is that while the documentation used to pre-approve you lasts 90 days, the letter is specific to the home an offer is being made on,” says Jon Meyer, licensed MLO and The Mortgage Reports loan expert. “So while rates are moving, it can actually look better in the offer to have a more recent letter.”
At the time this was written, mortgage rates had been rising sharply. And rising rates affect preapproval letters.
Suppose you’re approved to borrow $250,000 at a 3.5% rate. If mortgage rates suddenly jump to 4%, your monthly payments would be appreciably higher, and you probably couldn’t afford such a big loan. So, when rates are rising quickly, lenders might shorten the validity of preapproval letters.
Can you extend a mortgage preapproval?
Preapprovals typically can’t be extended, but they can be renewed. The difference is that your finances will need to be re-verified; you can’t just extend your preapproval based on previously submitted information.
Many lenders will want to see the latest versions of your preapproval documents. Those include your most recent pay stubs and banks statements from your checking, savings, retirement, and asset accounts.
“These documents have validity timeframes,” explains Meyer. “For example, your most recent bank statements cannot be more than two months old.”
You can understand why. The lender needs to know that your employment and financial circumstances haven’t changed.
Expect to see your maximum loan amount reduced if mortgage rates have risen significantly since you were last preapproved for a home loan. As explained above, you may now be able to afford a smaller mortgage.
On the other hand, if rates have fallen since you last got preapproved, that could help lower your monthly payment and/or boost your home buying budget.
How many times can you get preapproved during the house hunting process?
There really is no limit to the number of times you can get preapproved.
In a buyer’s market, when there are more homes for sale than buyers who want them, many house hunters find their perfect home within weeks or a few months. And they find it easy to get their offers accepted. So renewals are required less often.
But, in a seller’s market, it can take house hunters many months or even years to find a place and have their offer accepted. And they could need multiple preapprovals throughout the process.
Don’t be shy about repeatedly renewing your letter. Lenders understand the marketplace and many mortgage applicants will be in the same boat as you.
Does it cost money to get preapproved?
Nowadays, fewer lenders charge fees for preapprovals. And those that do usually deduct the fee (often $300-$400) from your ultimate closing costs, assuming you get your mortgage from them.
Will multiple preapprovals hurt my credit score?
Some lenders carry out “hard” credit inquiries when you apply to get preapproved. That means your credit score will take a small hit each time (usually less than 5 points on your FICO score).
If you get preapproved multiple times within a few weeks — which can happen when you’re shopping for mortgage rates — only one hard inquiry will count against your credit score. But if your preapprovals are spread out over many months while you house-hunt, your credit may take multiple small hits.
Some lenders make only a “soft” inquiry during preapproval, which doesn’t affect your score. Though there will be a hard inquiry later when you apply for your actual mortgage.
Tips for getting multiple preapprovals
It’s important to recognize that you’re not making a commitment to a lender when you get preapproved. You can comparison shop for the lowest mortgage and fees once you’ve had your offer accepted and are ready to move forward.
Keeping that in mind, it’s generally fine to choose your preapproval lender based on its preapproval offer. You probably want to call each lender on your shortlist and ask:
- Do you charge for preapproval?
- Will you do a hard or soft credit inquiry?
- How long will my preapproval letter last before it expires?
There’s nothing wrong with choosing your preapproval lender based on those criteria. After all, you’ll be comparison shopping later and can switch companies then if you find a better deal.
However, you want to be as sure as you can be that your preapproval lender offers competitive rates. Because the amount you can borrow will be lower if your quoted rate is artificially high.
Mortgage preapproval in a hot housing market
If you’ve been house hunting, you’ll know how tough it’s been for homebuyers in recent years. And things got worse during the pandemic.
To sum up, there are still too many homebuyers chasing too few homes. And that means sellers are in a very strong position.
Often, real estate agents present sellers with a whole list of offers from which to choose. And they typically consider offers in this order:
- Cash buyer
- Preapproved buyer
- Prequalified buyer (has spoken to a lender but doesn’t have a preapproval letter)
- Somebody whose financing is uncertain
Typically, the cash and the preapproved buyers are taken the most seriously. They’re seen as birds in the hand because they stand a high chance of closing on the purchase.
Those who are prequalified and unqualified are often immediately eliminated from the contest, even if they offer thousands of dollars more than anyone else. They’re seen as a higher risk because nobody knows how likely they are to close.
If you wish to be seen as an attractive buyer, you need to keep your preapproval letter current. Note the date on which it expires on your calendar and be sure to apply for a new one in plenty of time. If you don’t, you run the risk of finding your ideal home after your letter has expired.
What happens if I get preapproved then rates rise?
Your preapproval letter will specify both how much you can borrow and the mortgage rate on which that sum is calculated. The first is contingent upon the second.
Keep in mind that you can only lock your interest rate after you have a purchase agreement in place. So you won’t be able to lock in the interest rate for which you’re preapproved. It’s still subject to change up until the time your offer is accepted.
So if mortgage rates rise while the letter remains valid, the amount you can borrow will fall. Mortgage rates often go up and down daily or more frequently. And you can’t keep updating your letter that often.
When you’re ready to make an offer, call your lender for the current amount.
If mortgage rates are rising especially sharply, you want to comparison shop, make your application, and lock your rate as soon as possible.
How to start the mortgage preapproval process
Time your preapproval to coincide with the start of your serious house hunting. You don’t want to get it too early because its expiration clock will start ticking on the day it’s issued.
But you do need that letter on time. Because it will tell you your homebuying budget. And because you might luck out and find somewhere you love quickly.