What is loan pre-approval?
When starting the process of buying a home, potential buyers are likely to hear the term “pre-approval.”
This is a letter that lets sellers know the buyer has been pre-approved for a loan to buy their home. This letter includes the amount of money a lender thinks you can borrow. This amount is based on your credit and your income.
This lets buyers know what their budget is for a home, and also lets the sellers know that if they accept the buyers’ offer they will get approved for a loan.
Getting a pre-approval letter also helps buyers learn of any potential flags in their credit report that could prevent them from buying a home. This gives them time to address the issues and fix them, and then continue with the home buying process.
The pre-approval letter can also help speed up the process of purchasing a home once the buyers make an offer.