If I’m a few months away from having my downpayment saved, when should I get pre-approved?

Question:

I’m currently in the market for an investment property now, and I have decided the price range for the investment property and what I’m comfortable putting down, but I probably won’t come up with the down payment for a few months. I need another $2000 to $3000 based on my estimate. So, I have a few questions.

When would you suggest getting pre-approved for the loan if I don’t plan to buy for another few months? How many days does the pre-approval last? And if I find a home after the pre-approval expires, would it require another hard inquiry to my credit? Then lastly, if multiple lenders are pulling hard inquiries on my credit within a certain period of time, does it actually just count as one hard inquiry?

Answer:

Generally, pre-approvals last for four months, assuming there aren’t dramatic changes to income or your debt. For instance, you don’t go out and buy a new car 30 days after you get pre-approved, pre-approval should be good. If you find a property five or six months down the road, the lender will have to re-pull your credit, and that will be another hard inquiry.

The rule has been that if you’re shopping for a loan with multiple lenders within a 30 day period, your score should not be affected, although I have seen instances where credit scores do drop a few points when there’s multiple inquiries. So it might be better to talk to different lenders first, but not have all of them pull your credit. Once you decide who you want to work with, then you can have them pull the credit report.

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