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The act or process of determining the approximate amount a borrower will be able to borrow before he/she actually applies for a loan. Prequalification looks at the borrower's current income and debt to make this determination. Prequalification is most common with mortgages. Because the borrower has not applied for the loan, it is not a guarantee of approval, but is rather an estimation. See also: Pre-approval.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
To estimate the most expensive home a borrower can afford to buy with the assets, income,and expected loan amount and terms for which the borrower might be eligible.
The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.