To apply for a mortgage pre-approval, a person must provide detailed information about her income and assets that is then reviewed by the lender to ascertain whether or not the applicant is in a position to repay the loan. If approved, the person applying for a mortgage pre-approval gets a commitment of a certain loan amount from the lender.
Pre-approval is acquired to show that the person applying has the resources to enable her to purchase the property, and it also helps her act quickly once she has found a perfect home. Sellers view pre-approved buyers as more attractive than someone who has nothing but her word of mouth to back her claim that she can purchase a house. A mortgage pre-approval can help a person negotiate on price and it can also act as a deciding factor when a seller receives multiple bids. To get pre-approved for mortgage, there are certain qualifications a person must meet. These include: good credit, proof of assets, proof of income, employment verification and documentation. It is only then that the applicant may have an appraisal done. U.S. Bank National Association warns against applying for a pre-approval until a person is certain that she really wants to buy a house in the next 60 to 90 days. At its most basic, a pre-approval shows the applicant's credit-report inquiry, and is only good for a specific amount of time.