Preapproval
A written statement from a lender that they've reviewed the buyer's documents and credit and are willing to lend up to a certain amount. Sellers usually want to see one with an offer.
Your Room opens on showings and offers, with everything before the listing already ticked.
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See how it worksWhere this comes up in a sale, and what follows
- Host showings and open houses (comes before)
Part 1 of 4
Why a seller cares
A preapproval letter says a lender has actually looked at the buyer's finances; a prequalification says less. Comparing offers on the strength of the financing is comparing these letters.
Part 2 of 4
A simple example
Two financed offers at $300,000. One carries a preapproval from a local lender who has verified income and credit; the other a prequalification from a website. The first is a stronger offer at the same price.
| The letter | What the lender actually did |
|---|---|
| Preapproval | Pulled credit, read pay stubs and bank statements, named a ceiling |
| Prequalification | Took the buyer's word for the numbers |
| Loan commitment, later | Underwrote the whole file and approved the loan |
A preapproval is a lender's opinion after looking. A prequalification is an opinion without looking.
Part 3 of 4
What people get wrong
That a preapproval is an approval. The loan is not approved until underwriting says so, weeks later.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
In your Room, this word explains itself where it appears.
Your Room defines preapproval in the step you meet it in, beside the document or the date it belongs to. Free to set up, with an agent or on your own.
Organize my saleFree to set up. Pay once when you list: $89 or $189. 7-day refund.