Definition
Mortgage preapproval is a conditional commitment from a lender to give you a loan up to a specific amount. It involves a detailed review of your finances and gives you a clear idea of what you can afford when shopping for a home.
Understanding Preapproval in Mortgages
Early in the mortgage process, preapproval gives you an idea of how much a lender might be willing to offer. This can help when making offers on homes. Example: If a lender preapproves you for $250,000, it means they're considering that as a potential loan amount. But it's not a guarantee. It doesn't mean you have the loan or that you'll get those terms later. It's a preliminary assessment based on your financial information at that time. It's not the same as final loan approval, which comes after a detailed review of your finances and the property you want to buy.
