When buying a home, getting pre-approved for a mortgage is a crucial first step. It shows sellers you’re a serious buyer and gives you confidence moving forward in the homebuying process.
However, what happens if you don’t find the perfect home right away? Can your pre-approval be renewed or extended if the home search takes longer than expected?
In this post, we’ll explore the ins and outs of renewing or extending a mortgage pre-approval. We’ll look at the key factors lenders consider and common timelines.
Let’s get started.
What is a Mortgage Pre-Approval?
A mortgage pre-approval is a preliminary approval given by a lender, indicating how much they are willing to lend you to purchase a home.
To get pre-approved, you’ll submit documentation like paystubs, bank statements, tax returns and a written explanation for any credit blips. The lender will review your finances, credit history and ability to repay.
They’ll determine a maximum loan amount and interest rate they’re comfortable offering – usually contingent on an acceptable appraisal and final underwriting.
Pre-approval is non-binding for both you and the lender. However, it establishes your buying power and shows sellers you’re a serious contender. It’s typically valid for 60-90 days.
Can You Renew a Mortgage Pre-Approval?
The short answer is – in most cases, yes you can renew or extend a pre-approval if needed. Here are some important details on the renewal or extension process.
Lender Discretion – Whether a renewal is granted is ultimately up to the lender. They’ll re-verify your financial details and credit to ensure nothing has changed.
Documentation Needed – You’ll need to provide updated documents like paystubs, bank statements or tax returns. The lender may request a new application and appraisal too.
Common Timeframes – Approvals are typically renewed in 30-90 day increments, though some lenders offer 6 months. Don’t expect indefinite renewals.
Rate Locks – If you obtained a mortgage rate lock as part of your initial pre-approval, it likely won’t be extended when renewing. You’ll be subject to current rates.
Renewal Fees – Some lenders charge small renewal fees of $200-500. Make sure to find out your lender’s policy on fees.
Provided there have been no major financial changes, most lenders are open to renewing pre-approvals for buyers who need more time. Just be proactive about getting the renewal started.
When Should You Renew a Mortgage Pre-Approval?
There’s no definitive timeline for when to renew. But as a general guideline, here are some signs it may be time to start the renewal process:
2-4 Weeks Before Expiration – Reach out to your lender to initiate the renewal. They’ll advise on documentation needed.
60 Days Before Expiration – If home buying conditions have slowed, you may only need a 30-60 day extension. Get the ball rolling early.
90+ Days Before Expiration – Home values fluctuate, so major life changes like jobs could impact your approval. Renew well ahead.
After Multiple Offers Fall Through – Continued rejections may mean the market has shifted. Ensure your approval accounts for this.
If Key Financials Change – New jobs, income changes, debt obligations – these may require re-submitting full applications.
Proactively managing the renewal timeline avoids last-minute stresses. Keep channels open with lenders for seamless extensions when needed.
Factors Impacting Renewal Approval
When deciding to renew a pre-approval, lenders consider several risk-based factors. Ensuring your situation aligns with their guidelines maximizes chances of approval:
Credit Score/History -Make sure no recent negative marks appear. Lenders may tighten terms with credit deterioration.
Employment Status – Losing a job or experiencing prolonged unemployment complicates renewals. Lenders want stability.
Debt Levels – Taking on major new debt like credit cards could reduce affordability in a lender’s analysis.
Income/Assets – Decreased income or sizable asset depletion require re-evaluation of your ability to repay.
Collateral Value – In a shifting market, property values impact loan-to-value ratios. Appraisals may be requested.
Co-Applicant Changes – Separations, divorces or issues with a co-signer impact risk profiles and need re-underwriting.
Renewal Best Practices
Now that we’ve covered the main renewal considerations, here are some additional best practices to maximize your chances of success:
Communicate with Your Lender. Explain your ongoing search and need for more time. Lenders appreciate proactive clients.
Organize Required Docs Early. Have paystubs, asset statements, tax returns readily available when requested. Avoid delays.
Consider Multiple Lender Options. Shop renewals just as you would approvals. Some lenders may be more flexible than others.
Ask About Rate Lock Extension Options. Inquire about continuing an existing interest rate beyond the renewal timeframe if needed.
Keep Hunting for Homes Actively. Show continued motivated efforts finding a property through saved listings, open houses visited, etc.
Prepare for Potential Changes. Know your lender may alter terms like loan amounts or rates given shifting risk profiles on renewal.
Renewal Scenarios To Consider
To bring this all together, let’s explore a few real-life scenarios buyers may face and the best renewal approaches:
Scenario 1: Ongoing Search + Minimal Life Changes
Sarah’s been looking 3 months with no luck. Her job, income and credit are unchanged. Renewing 30-60 days while continuing an active search is straightforward.
Scenario 2: Multiple Offer Rejections + Shifting Market
Brad’s offers kept getting outbid. Home prices rose 10% in 6 months. He may need to re-qualify with an appraisal to adjust his buying power to the new market conditions.
Scenario 3: New Job + Significant Pay Bump
Michael just started a higher paying job. He’ll need to fully reapply showing his increased income makes him eligible for a larger loan amount.
Scenario 4: Divorce Finalized After Breakup
Rebecca and her ex had joint financing. Their separation requires full underwriting as a single buyer vs. a coupled applicant.
Final Thoughts: Plan Ahead For Mortgage Pre-Approval Renewals
In summary – yes, mortgage pre-approvals can definitely be renewed, extended or refreshed if your home search takes longer than the initial approval period.
However, renewal is not guaranteed and lenders consider various risk-based factors when making decisions.
The best approach is communicating proactively with your lender and staying on top of documentation requests. Be prepared to provide updates on your financial situation as circumstances warrant.