By Lisa Prevost | The New York Times
Smaller lenders are using preapprovals to attract borrowers in markets where competition for homes is fierce.
A preapproval is a written confirmation of the maximum loan amount for which a borrower qualifies, along with the likely interest rate, and shows sellers that a buyer has the financing to back up an offer. While not a firm commitment to lend, a preapproval offers more certainty than the less formal prequalification because it is based on the borrower’s income and assets, as well as a credit check.
