Please Explain Preapproval as if I'm Five

[Joey Gorombey]

Hi all,

Could someone please explain to me what pre-approval really is? I have a pre-approval notice, and I'm not sure what the legalities of sending it out to agents or exposing it are. Is it designed to be shown to agents? What good is it to them? Googling, too, in the interim, but these forums have been helpful for noob questions. Thanks in advance! 

[Tom S.]

@Joey Gorombey Pre-approval means you've passed the basics for getting the loan. Sufficient income, DTI ratios, credit score, downpayment.

The final approval still might not happen for a variety of reasons: for example, you send over your bank statement and they see you borrowed the downpayment.  Or they find out you owe money to the IRS.  Things like that.