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Personal Finance Alert: What is Pre-Approval?


 

Finance terms can sometimes get complicated, like for example, what is pre-approval anyway? It’s hard to focus on your personal finances when the terms still aren’t making any sense to you. But, don’t stress, where here to break it down for you and make your personal financing more enjoyable! So, what is pre-approval? Well, pre-approval is when you’re going into a lender for a loan and you’re getting approved for that loan in advance. How do you do that:

  • Fill out an application and submit your financial data to the lender.
  • The lender will run your credit.

So, why is this happening? Well, what the lender is really doing is running your credit to see if you are eligible to borrow a certain amount of money. Where you see this the most is with people who are shopping for a home or an apartment. A lot of times the realtor will tell you to get pre-approved in advance. Once you get pre-approved you get a piece of paper that says yes we will loan you money and you can bring it to for example the realtor and this may help in reassuring that the people who are selling the house will get their money. Want to know more? Check out the video above.