What Exactly Is a Pre-Approval?

You’re getting more serious about buying a home and you’ve been advised to get a pre-approval letter but…what exactly is that?

Great question! 

A pre-approval letter is a formal, written statement from a mortgage lender stating a prospective homebuyer has been preliminarily approved for a loan amount. It’s determined by a financial review of your credit score, income, assets and debts. 

A pre-approval letter will share the maximum loan amount you qualify for, along with the loan type and is valid for about 30-90 days. Expiration can vary based on lender. 

So why do buyers need to have this? 

It shows sellers and their agents that you are a serious and financially capable buyer and it helps establish a realistic range of home prices you can explore. Additionally, later in the home buying process it helps move things along more smoothly since a lot of the financial vetting was completed early on. 

Getting a pre-approval letter early on in your house hunting journey is helpful because it gives you a guide on what you can afford and when you find your dream home, you’re positioned to jump on it with an offer! 

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