Pre-Approval

A mortgage pre-approval is a formal evaluation by a lender confirming the maximum loan amount a buyer is qualified to borrow based on verified financial data. Unlike an informal pre-qualification, pre-approval requires running a credit check, analyzing W-2s, pay stubs, tax returns, and bank statements, and running automated underwriting system (AUS) approval. Real estate agents and home sellers require a current pre-approval letter to verify that an offer is financially sound before accepting a purchase agreement.