Document background
The Bank Pre Approval Letter is a fundamental document in the U.S. lending process, particularly in real estate transactions. It is issued after a preliminary review of a potential borrower's creditworthiness, income, assets, and other financial information. The letter serves multiple purposes: it helps borrowers understand their maximum borrowing capacity, strengthens their position in property negotiations, and provides sellers with confidence in the buyer's ability to secure financing. While not a final commitment to lend, the pre-approval letter, subject to federal and state banking regulations, typically includes specific details about the potential loan amount, type of loan, interest rate ranges, and conditions that must be met for final approval. The document is usually valid for 60-90 days and requires compliance with various U.S. banking regulations, including the Truth in Lending Act and Equal Credit Opportunity Act.
