What does it mean to get pre-approved?

A pre-approved mortgage is very common. With pre-approval, your lender approves the amount of your mortgage and gives you a written confirmation or certificate for a fixed period before you start looking for a new home. The pre-approval term, usually lasting from 60 to 90 days, also sets the mortgage rate the lender will offer to you. If rates go down in that period, the lender will usually offer you the lower rate.

Pre-approval gives you a head start on house hunting since you know exactly what you can afford before you start looking. It also gives you bargaining power when you are writing an offer. If multiple buyers are making offers on the property you want, the fact that your financing is already arranged gives you a competitive edge.

Although you are pre-approved, your final approval, however, is still subject to a review of the property you are purchasing, and a credit review of your finances. Hold off on any large purchases until you have actually moved in. You don't want to buy a new car on credit, and then get turned down on your final mortgage approval because your monthly debt load has increased!