It’s Important to Get Your Mortgage Pre-approval Updated in Any Real Estate Market, but Especially This One

If you’ve been searching for a house for any amount of time, you’re probably well aware of how important it is to get a mortgage pre-approval before you even start looking at houses, or at least as early on in the process as possible.

But what might come as a surprise to you is that you should also get it updated once in a while — especially considering the current real estate market, because mortgage rates have fluctuated up and down, and it’s often taking buyers longer to find a house to buy.

It might sound like a pain in the neck to have to do it again, but the benefits of spending a few minutes getting your pre-approval updated will make it worth the time spent.

When Should You Update Your Pre-approval?

Pre-approvals aren’t good forever. The length of time each lender extends an approval for may vary, but they’re typically good for 60-90 days before they need to be updated or renewed. So, in the least, you’ll want to get it updated whenever your lender’s approval letter expires. But there are other things that can impact your pre-approval during those two to three months which may affect your approval as well.

Here’s a list of things that would indicate it’s a good idea for you to get your pre-approval updated:

• If you took a break from looking. The past few years have been frustrating for buyers, causing many people to take a break from their house hunting. If you’ve been on the sidelines for even just a few months, you should reach out to your lender to get your pre-approval updated.
• If it’s been taking a while to find the house you want, or get one under contract. Even if you haven’t taken a break, time flies when you’re having fun, and the next thing you know you’ve been on the prowl for a new home for longer than it seemed. If that sounds like you, you’re not alone. Due to low inventory, and a lot of other buyers competing for the limited number of houses on the market, it can take a while to finally find (and get!) your dream home. So take a look at the dates on your pre-approval to see if yours is still good or not.
• If you’ve changed jobs. Even if you’re making more money than you were before, changing your career can impact whether a lender will approve you for a loan. If it’s an upward or lateral career move within the same or similar industry, you should be fine. But if you’re entirely changing careers and getting into a different field, it could be something that lenders frown upon. Either way, reach out to see if it impacts you so you can ease their concerns if there are any.
• If you’ve had changes in your finances. Obviously an increase or decrease in pay at your job could impact how much you’re approved for. But any change in your finances makes it worth updating your pre-approval. For instance, if you’ve received any inheritances, bonuses, or paid off some significant debt, it’s a good idea to revisit your pre-approval to leverage your improved financial position.
• If you bought a car, or any other big-ticket item. Big purchases, especially if they come with loans you have to pay on a monthly basis, can impact your debt to income ratio. But even if you paid all cash for something, it could impact how much the bank is willing to lend to you.
• If your credit score has changed. It’s easier for people to keep an eye on their credit score now than it ever was, so if you’ve been watching yours and have seen it go up or down recently, you might want to see how that impacted your pre-approval by getting it updated.
• If interest rates have changed. Mortgage rates are constantly changing. A small percentage change won’t necessarily impact you all that much, but if rates have gone up since you were first pre-approved, it could impact how much you qualify to borrow. On the other hand, if rates have come down since you were first pre-approved, it could be a good time to lock in a rate if you’re close to making your purchase. Even a small monthly savings can add up over the life of the loan.
• There may be new programs or types of loans available to you. Lenders roll out new types of loans on occasion, or change the criteria you need to meet in order to qualify for existing ones. So it’s worth updating your pre-approval to see if there’s a better fit for your situation, which may even improve how much you can borrow, or give you better terms.

Even if none of those apply to you, an up-to-date pre-approval letter will be required by the listings agent whenever you make an offer on a house. So make sure your pre-approval is current at all times to avoid wasting precious time when you find a house you love. Also, submitting one that is outdated could also impact how the listing agent and seller view you, if you don’t look as prepared and thorough as other competing buyers.

The Takeaway:

Even if you’ve already been pre-approved for a mortgage, you might need to get your pre-approval updated on occasion during the process of searching for a home. For starters, they’re only valid for 60-90 days typically. But beyond that, there are a number of factors that could impact your approval within that time frame, so make sure to have your lender update yours if there have been any significant changes in your life, or the market since your first approval was done.