If you answered B, you’re correct!

When you’re pre-approved for a mortgage, it means you’ve gone through a formal application process with a lender, and they have reviewed your financial information, including your credit score, income, and debt. Based on this review, the lender provides you with a written commitment stating the maximum loan amount they are willing to lend you for a home purchase.

This pre-approval is a significant step in the homebuying process because it:

Determines Your Budget: It helps you understand how much you can afford when shopping for a home.

Strengthens Your Offer: Sellers often view pre-approved buyers more favorably because they have already secured financing.

Saves Time: You can focus your search on homes within your budget, making the process more efficient.

Increases Confidence: Knowing you’re pre-approved gives you confidence when making an offer on a home.

Remember that pre-approval is different from pre-qualification. Pre-qualification is an informal estimate of how much you might be able to borrow based on basic financial information you provide to a lender. Pre-approval is a more in-depth and formal commitment from the lender, making it a crucial step when preparing to buy a home.