What is a Mortgage Pre-approval?
A pre-approval is a commitment from a mortgage provider to lend you a certain size mortgage at a particular rate subject to the approval of the property. When you get pre-approved for a mortgage, you’ll find out the maximum amount you can afford to spend on a home, the monthly mortgage payment associated with your maximum purchase price, and what your mortgage rate will be for your first mortgage term.
Applying for a mortgage pre-approval is free and does not commit you to a lender. However, getting pre-approved does hold the mortgage rate you are offered for 60 to 90 days. This means you are protected if interest rates rise while you are shopping for a home. If interest rates go down during this time, your lender will honor the lower rate. That said, a pre-approval is not a full guarantee you will receive that rate. That relies on your finances staying the same when you finally apply for your mortgage.