Pre-approval

Pre-approval

In lending, pre-approval has two meanings:

1. The first is that a lender, via public or proprietary information, feels that a potential borrower is completely credit worthy enough for a certain credit product, and approaches the potential customer with a guarantee that should they want that product, they would be guaranteed to get it. This rarely happens in the financial services industry, usually what happens is pre-qualification instead.

2. The second meaning has to do with mortgage lending. People interested in buying a house can often approach a lender, who will check their credit and verify their income, and then can provide assurances they would be able to get a loan up to a certain amount. Buyers can then get a letter of pre approval from the lender, and when shopping for a home can have possibly an advantage over others because they can show the seller that they are more likely to be able to buy the house. Note that a pre-approval letter from a lender is not a guarantee from the lender that a loan will be provided. [ [http://homebuying.about.com/cs/mortgagearticles/a/loanterms.htm Getting Pre-Approved for a Mortgage - Pre-Approval vs. Pre-Qualification ] ]

References

ee also

*Credit
*Mortgage loan


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