How many times can you get pre-approved for a home loan?

Can you get pre-approved for a mortgage multiple times?

You bet! You can get pre-approved for a home loan as often as needed.

Each pre-approval letter comes with an expiration date. And, once the pre-approval expires, you’ll need a new one to continue house hunting and making offers.

In today’s hot real estate market, where finding a home can take months, it’s quite common to need multiple pre-approvals. And you need to make sure you stay up to date as you will need a valid letter in hand when you find the house you want.

Start your mortgage pre-approval (February 22, 2022)

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How long does a pre-approval last?

Each lender decides how long their pre-approval lasts. Usually pre-approval letters are valid for 30, 45 or 60 days. A few lenders used to have 90-day expiration dates and you could still find one, although it’s less common now.

As of this writing, mortgage rates have risen sharply. And rising rates affect pre-approval letters.

Suppose you are authorized to borrow $250,000 at an interest rate of 3.5%. If mortgage rates suddenly rose to 4%, your monthly payments would be significantly higher and you probably couldn’t afford such a large loan. So when rates rise rapidly, lenders can shorten the validity of pre-approval letters.

Can you extend a mortgage pre-approval?

Pre-approvals generally cannot be extended, but they can be renewed. The difference is that your finances will need to be double-checked; you cannot simply extend your pre-approval based on information already submitted.

Many lenders will want to see the latest versions of your pre-approval documents. These include your most recent payslips and bank statements for your checking, savings, retirement and asset accounts. You can understand why. The lender needs to know that your job and financial situation have not changed.

Expect to see your maximum loan amount reduced if mortgage rates have increased significantly since you were last pre-approved for a home loan. As explained above, you may now be able to afford a smaller mortgage.

On the other hand, if rates have dropped since your last pre-approval, this could help reduce your monthly payment and/or increase your home buying budget.

Start your mortgage pre-approval (February 22, 2022)

How many times can you get pre-approved during the house hunting process?

There really is no limit to the number of times you can be pre-approved.

In a buyer’s market, when there are more homes for sale than buyers who want them, many home hunters find the perfect home within weeks or months. And they find it easy to get their offers accepted. Renewals are therefore less often necessary.

But, in a seller’s market, it can take months or even years for house hunters to find a home and get their offer accepted. And they might need multiple pre-approvals throughout the process.

Do not hesitate to renew your letter several times. Lenders understand the market and many mortgage applicants will be in the same boat as you.

Does it cost money to get pre-approved?

Fewer lenders are charging fees for pre-approvals these days. And those who do usually deduct the fee (often $300 to $400) from your ultimate closing costs, assuming you get your mortgage from them.

Will multiple pre-approvals hurt my credit score?

Some lenders do “serious” credit checks when you ask for pre-approval. This means that your credit score will take a small hit each time (usually less than 5 points on your FICO score).

If you get pre-approved multiple times in a few weeks — which can happen when shopping for mortgage rates — only one serious inquiry will count against your credit score. But if your pre-approvals stretch over several months while you’re looking for a home, your credit can take a few hits.

Some lenders only do a “soft” inquiry during pre-approval, which doesn’t affect your score. Although there will be a tough investigation later when you apply for your actual mortgage.

Tips for getting multiple pre-approvals

It is important to recognize that you are not committing to a lender when you get pre-approved. You can compare the lowest mortgage and fees once your offer has been accepted and you’re ready to move on.

With that in mind, it’s generally a good idea to choose your pre-approval lender based on their pre-approval offer. You’ll probably want to call each lender on your shortlist and ask:

1. Do you charge for pre-approval?
2. Will you do a firm or indirect credit check?
3. How long will my pre-approval letter last before it expires?

There’s nothing wrong with choosing your pre-approval lender based on these criteria. After all, you’ll be doing comparison shopping later and can switch companies if you find a better deal.

However, you want to be as sure as possible that your pre-approved lender offers competitive rates. Because the amount you can borrow will be lower if your quoted rate is artificially high.

Start your mortgage pre-approval (February 22, 2022)

Mortgage pre-approval in a hot housing market

If you’re looking for a home, you know how difficult it has been for buyers in recent years. And things got worse during the pandemic.

In summary, there are still too many buyers looking for 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 to choose from. And they usually consider offers in this order:

1. Cash buyer
2. Pre-approved buyer
3. Pre-qualified buyer (has spoken to a lender but does not have a pre-approval letter)
4. Someone whose funding is uncertain

Generally, money and pre-approved buyers are taken the most seriously. They are considered birds in the hand because they have a high chance of closing the purchase.

Those who are pre-qualified and not qualified are often immediately eliminated from the competition, even if they offer thousands of dollars more than anyone else. They are considered higher risk because no one knows how likely they are to close.

If you want to be seen as an attractive buyer, you need to keep your pre-approval letter current. Note the date it expires on your calendar and be sure to request a new one well in advance. If you don’t, you run the risk of finding your ideal home after your letter expires.

What if I’m pre-approved and then the rates go up?

Your pre-approval letter will specify both the amount you can borrow and the mortgage rate on which that amount is calculated. The first depends on the second.

Remember that you can only lock in your interest rate after you have a purchase agreement in place. You will therefore not be able to lock in the interest rate for which you are pre-approved. It is always subject to change until your offer is accepted.

So if mortgage rates go up while the letter remains valid, the amount you can borrow will go down. Mortgage rates often go up and down daily or more frequently. And you can’t keep updating your letter so often.

What you can do is follow mortgage rates every day to see where they are going. And use a mortgage calculator to see the likely impact of changes on your maximum purchase price.

When you’re ready to make an offer, call your lender for the current amount.

If mortgage rates are rising particularly sharply, you want to compare, apply, and lock in your rate as soon as possible.

How to start the mortgage pre-approval process

Time your pre-approval to coincide with the start of your serious home search. You don’t want to get it too early because its expiration clock will start ticking the day it is issued.

But you need this letter in time. Because it will tell you your home buying budget. And because you might get lucky and quickly find a place you like.

Show me today’s rates (February 22, 2022)