Mortgage approvals don’t last forever.A conforming mortgage approval from Fannie Mae or Freddie Mac has a shelf-life of 120 days.

After 120 days, the approval expires and a mortgage applicant must re-submit his application for consideration.

In addition, a mortgage approval can “expire” within the 120-day period for other reasons:

• Change of job status or income
• Newly-acquired monthly debt (i.e. car payment, student loan)
• Change in asset levels

If your current mortgage approval (or pre-approval) is dated prior to February 3, 2008, it is now expired and your new approval may be subject to Fannie Mae’s new, more strict, underwriting guidelines.

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Mortgage rates rocketed higher last week, stunning active home buyers and mortgage rate shoppers.Some conforming mortgage rates rose by as much as three-quarters of a percent before Friday’s closing.

Even in a year in which mortgage rates have been extremely volatile, last week’s spike was a large one.

The main driver of last week’s increase was additional evidence that the U.S. economy was never in a recession at all; only that it was “weak”.

From last week:

1. New Homes Sales (including cancellations) reported strong
2. Durable Goods showed surprising strength
3. The Chicago “Business Barometer” showed confidence

All three data points run opposite to what market players believed just six weeks ago and the reversal in mortgage rates is, in part, related to those traders selling out of bonds and moving into something else.

Another part of the shift is weak demand foreign for U.S. treasuries.  Lackluster support from buyers drove down prices last week and helped push up yields.

It all adds up to mean that this is a dangerous time to float a mortgage rate and this week shouldn’t be safer than last.  Friday is Jobs Reports Day and that always swings a big stick in the mortgage markets.

Until Friday, though, mortgage rates are expected to exhibit the same volatility that they have all year — some days up, some days down and most days by a lot.

Falling oil prices may create some downward pressure this week, but the overall momentum is higher.

(Image courtesy: Wall Street Journal Online)

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