Being pre-approved means you’ve actually been verified and approved by a lender for a specific loan amount. When pre-approved, you will receive a letter that states your approved loan amount.
Unlike getting pre-qualified, when getting pre-approved you provide documented financial information (pay stubs, statements, obligations, credit report, etc.) to be reviewed and verified by the lender.
Benefits of being Pre-Approved:
- Gives you negotiation power
- Helps you know exactly what you can afford
- Allows you to close faster
Keep in mind that being pre-approved doesn’t guarantee you a loan. You still have to complete an application, go through the underwriting process, and wait for final approval from a lender. However, being pre-approved indicates your intent to purchase, so sellers look fondly upon buyers with pre-approval letters.