Also found in: Wikipedia.


A commitment by a mortgage lender to provide a loan with a certain monthly payment to a borrower. A lender offers pre-approvals in hopes that the borrower to whom it is offered will use that lender in securing a mortgage. It should be noted that, while the monthly payment is fixed, the interest rate and therefore the total amount available to be borrowed are not. This can limit the potential borrower's options as he/she seeks to buy real estate.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


A lender commitment to make a mortgage loan to a specified borrower, prior to the identification of the property that will be mortgaged.

On a pre-approval, unlike a pre-qualification, the lender verifies the financial information provided and checks the credit of the potential borrower.

Prospective homebuyers seek pre-approvals because they believe it helps them in shopping for a house. Lenders offer pre-approvals in the hope that the homebuyers receiving them will come back to them for a loan after they contract to purchase.

The lender's commitment under a pre-approval is usually expressed in terms of the monthly mortgage payment that the prospective buyer has the income to meet. Converting the mortgage payment into a loan amount requires an assumption regarding the interest rate, which is not known at the time of the pre-approval. Since the lender is not committed to an interest rate, an increase in rates could reduce the approved loan amount.

The Mortgage Encyclopedia. Copyright © 2004 by Jack Guttentag. Used with permission of The McGraw-Hill Companies, Inc.
References in periodicals archive ?
The Pre-Approval process shows that BRE Global are both listening to and acting upon the market's requirements and finding time and cost savings for clients and assessors, whilst maintaining the integrity of the world's leading sustainability assessment and certification method for buildings.
SEC lawyers led by Cheryl Crumpton wrote in a response to Musk's defense that he interprets the settlement order as not requiring pre-approval unless Musk decides the tweets are meaningful to investors.
Musk told the "60 Minutes" program of CBS in December 2018 that he does not respect the SEC and only those tweets require pre-approval that deal with Tesla's stock price.
The SEC noted that Musk has violated the court's final judgment by engaging in the very conduct that the pre-approval provision of the final judgment was designed to prevent.
M2 PHARMA-February 19, 2019-WuXi Biologics announces EMA Pre-Approval Inspection of cGMP DS and DP Facilities
The Ministry of Education and Higher Education launched yesterday its electronic system for equivalence of self-paid university degree certificates and the pre-approval of education in a foreign country.
QNA Doha The Ministry of Education and Higher Education on Sunday launched its e-system for equivalence of self-paid university degree certificates and the pre-approval of education abroad.
which has secured pre-approval for a medical cannabis cultivation license in Israel, the company said.
The importance of securing a mortgage pre-approval before beginning the search to buy a property is imperative.
To help buyers compete and win offers, Redfin Mortgage offers an underwritten pre-approval, in which all required borrower information is underwritten by the company in advance of the homebuyer finding a property to purchase.
In the UAE, not many obtain pre-approval details before applying for a loan.
Workers' Comp Insurance Rate Pre-Approval Passes in Illinois