Definition of Pre-approval:
A pre-approval is a preliminary evaluation of a potential borrower by a lender to determine whether they can be given a pre-qualification offer. Pre-approvals are generated through relationships with credit bureaus which facilitate pre-approval analysis through soft inquiries. Pre-approval marketing can provide a potential borrower with an estimated interest rate offer and a maximum principal amount.
A buyer with good credit can get pre-approved before shopping for a home. The lender checks the borrowers credit and income to determine how much they can take in a loan. This gives the borrower a price range for home shopping but is not a guarantee for a loan.
Pre-approvals are used as a marketing tool for lenders.
Meaning of Pre-approval & Pre-approval Definition