What is Mortgage Pre-Approval?

What is Mortgage Pre-Approval?

Mortgage Pre-Approval is a lender’s preliminary nod that a prospective borrower qualifies for a loan up to a certain amount, assuming no dramatic credit or income changes. It’s based on verified data—like pay stubs, tax returns, or credit checks—and typically includes an interest rate estimate. Having pre-approval means a buyer can demonstrate serious financial readiness when making offers.

• Financial Review: Lenders assess creditworthiness and debt-to-income ratios.
• Validity Period: Pre-approvals expire if not used within a set timeframe (often 60–90 days).
• Not a Guarantee: Final loan confirmation awaits property-specific checks.
• Negotiation Power: Sellers often favor pre-approved buyers for swift deal closures.

Pre-approval expedites transactions, ensuring all parties know budget constraints and that financing hurdles have been mostly cleared beforehand.