Q:

What is pre-approval?

A:

Quick Answer

Pre-approval means a lender is ready to make a customer a loan or extend some other type of credit based on information the customer provided or that the lender retrieved from a credit reporting agency. Pre-approval is not usually a guaranteed approval; instead, it is an initial creditworthiness evaluation.

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What is pre-approval?
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Full Answer

In mortgage lending, pre-approval lets home buyers know the highest loan amount they can get. The bank often provides a pre-approval letter with that amount for buyers to show sellers they are qualified and serious about buying a home. Pre-approvals typically come with conditions, and expiration dates and pre-approval letters are not binding for the lenders.

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