How Long Is a Pre-Approval Letter Valid? Forever, as long as...

We have over 800 pre-approved borrowers in our database – all closely tied to their respective referral sources I might add.

As an aside, each pre-approval requires about two to four hours of labor, depending on complexity, with additional hours often required for scenarios, questions, advice, calling agents, etc.

Our historic conversion rate for pre-approved borrowers is around 50% but it has been climbing significantly in recent months because of our lower rates, superior follow-up sequences, and just better service in general.

With so much invested and so much at stake (most of our future revenues), we treat our pre-approval database like gold.

Most of our pre-approvals convert into closed transactions within a few months, but some don’t convert for several years.

The question we hear time and again is – how long does my pre-approval remain valid?

Our stock answer is that pre-approvals remain valid as long as the primary criteria we used to pre-approve the borrower remains the same.

The primary criteria include a borrower’s employment, income, debt obligations, assets, and credit. If any of these criteria change, we need to know so we can evaluate the impact on a borrower’s qualifications and pre-approval.

If a borrower is marginal or “tight” with any of the above criteria, we like to re-evaluate the borrower every ninety days at least.

For example, if a borrower’s middle credit score is at or close to a cut-off point like 680 (jumbo financing) or 700 (HELOCs), we will want to make sure the borrower’s credit remains above the cut-off point by pulling a new report when necessary (credit reports in general remain valid for 120 days).

Similarly, if debt ratios are very tight and rates are increasing, we will want to run numbers again periodically to see how much the rate increases are impacting a borrower’s maximum qualifying amount.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 310167

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