What is a Pre-Approval Letter?

A pre-approval letter is a written document from your lender that details the purchase price you are approved for & any terms that must be met for the approval of your home. You need to know (and your realtor needs to know) what home price you can afford - this is the first important step any buyer must take before beginning the home buying process. A pre-approval letter is included with any offer you write & sellers use your pre-approval letter to make a decision on your offer. As a realtor, a 'pre-approval letter' is preferred, though some lenders today will only provide a 'pre-qualification letter'.