Pre-Approval
Definition
A lender's conditional commitment to lend you a certain amount after verifying credit, income, and assets. For mortgages, pre-approval gets you a specific max amount. For credit cards, pre-approval means you're likely to get approved.
Why It Matters
Mortgage pre-approval proves you're a serious buyer in real estate negotiations. Sellers are more likely to accept offers from pre-approved buyers. Shopping for pre-approvals (rate quotes) is free and doesn't hurt credit.
Example
Want to buy a house. Get pre-approved for $500k mortgage. You can confidently make offers on homes under $500k. Without pre-approval, sellers don't take your offer seriously.