I’m often asked by home buyers “does my preapproval letter expire” or “what happens if we don’t find a home in a few months”. Preapproval letters should include two dates: when the letter was prepared and when the preapproval expires. Fear not, most of the time, it should just take providing a couple documents to your loan officer so they can “dust off” your application and provide an updated pre-approval letter.
Why do they expire? Certain documents provided to the lender are only good for a certain period of time. For example, the credit report has a shelf life of roughly 80 days. Any changes to your loan application may impact your preapproval status as well. These changes include:
- income (including changes to how income is structured).
If you buy a new car before you buy and close on your next home loan, your credit score may have most likely dropped (unless you paid cash) and you now have a new debt to factor into qualifying for your new mortgage… and yes, your credit is checked just before closing.
With income and employment, a raise or new job may sound like a wonderful opportunity and one would assume the underwriter would be happy for you. However, if your income is going from a salary to a reduced salary with a large bonus thanks to a promotion, chances are, the large bonus may not be factored into your income.
Often times, updating a preapproval letter is a simple task. Your Loan Officer may just need updated paystubs and bank statements and they may need to run your credit again. If new W2s have since been issued, they will most likely need those too.
While in the “preapproval” stage, it’s critical to not throw anything away. Keep your paystubs, documentation of any large deposits (you’ll need to source them) and contact your loan officer if you have any questions. Unplug your shredder until you’re moving into your new home. 🙂
Plan on providing your Mortgage Professional updated income and asset documentation every month or when you need an updated preapproval letter.
Most real estate agents, both your agent and the listing agent, will probably want to see a preapproval letter that’s freshly dated and not something that’s a few months old.
If you are considering buying a home anywhere in Washington state, I’m happy to help you with your preapproval and mortgage needs.