I was approved for a mortgage in December and just found a house that I want to buy. I called my lender to check on rates and they told me that my loan approval expired? Is this common or just specific to my broker? Julie – Munster
You are not alone, Julie. Lending guidelines state that loan commitments are valid for a maximum of 120 days and in some cases less. Let’s think about this for a minute . . . you apply for a loan in December but don’t purchase a home until May. You could have had a job change, had a couple of late payments that affected your credit score, you could have less money in your accounts than you did at the time of application or the lending guidelines could have changed from the time you applied for your loan.
You will need to provide your lender with updated pay stubs, bank statements and recent tax returns. Your lender will need to order an updated credit report to be sure you meet their minimum credit score requirement. The loan will be underwritten as if it were a new loan . . . and you will be issued a new loan commitment if everything is as good or better than when you initially applied for your loan.
Hopefully your lender explained that during the loan process you should not add any additional debt, change jobs, and/or deplete your bank accounts. Should any of these factors change, your loan approval could be in jeopardy.
Julie, your next step is to provide your lender the necessary paperwork to update your loan commitment. This time, you can also provide the purchase agreement on your new home! Congratulations!
Donna Holmer is Branch Manager & Senior Loan Officer for Diamond Residential Mortgage Corporation in Merrillville, IN. You can email your questions to Donna.Holmer@TheDRMC.com or call Donna at (219) 682-4208. Evening appointments are available.