A pre-approval is given when the lender checks the buyer’s credit report and verifies employment history, income, and down payment amount. A full review of the pre-approval application can take 12–24 hours. Once a property is chosen, it must also meet the underwriting guidelines of the lender.
A pre-approval letter must accompany written offers as seller’s expect to see that the buyer is in a position to purchase the home.
Pre-approval is different from pre-qualification. Pre-qualification is an informal process where an estimate is given as to how much a buyer can afford.