Basically, a mortgage pre approval is the process where a lender approves or declines to you for a possible mortgage before you make an offer on a home. Once you make an offer on a home a pre approval turns to a formal approval.
During a pre approval review, a lender reviews your finances to determine if you can afford a home and if so what is the maximum price of a home you can buy. A pre approval helps you determine if there is a strong possibility that you will be approved for a mortgage once you make an offer on a home. Read our full guide about mortgage pre approvals.