Preapproval

Definition

A preliminary review done by a lender from verified documents (proof of income, down-payment statements, list of debts) and a credit inquiry. It sets a maximum amount, a validity period, usually 90 to 120 days, and often a held rate: if rates rise during the validity window, you keep yours; if they fall, the lower rate has to be requested. It is not a financing guarantee. The lender has not yet seen the property, its value, or your documents as of the offer date. Example: pre-approved for $450,000 in March, you find a condo in June with high condo fees; the lender counts half of them in your ratios and the eligible amount drops. Always keep a financing condition in the offer.