Definition
A lender's written commitment to fund a mortgage up to a specific amount based on a review of the borrower's credit, income, assets, and debt. Preapproval involves a hard credit pull and is stronger than prequalification. Most sellers require a preapproval letter with purchase offers. Preapproval is typically valid for 60-90 days.
Related Mortgage Terms
- Debt-to-Income Ratio (DTI)
The percentage of your gross monthly income that goes toward debt payments, incl...
- Prequalification
An informal estimate of how much you may be able to borrow based on self-reporte...
- Amortization
The process of paying off a mortgage through regular monthly payments of princip...
- Annual Percentage Rate (APR)
The total annual cost of a mortgage expressed as a percentage, including the int...
- Appraisal
A professional assessment of a property's market value conducted by a licensed a...
Understanding mortgage terminology helps you compare loan offers and make informed decisions. Use our mortgage calculator to see how these terms affect your monthly payment.