Can you explain how a mortgage pre-approval works?

A mortgage pre-approval is a process where a lender evaluates your financial information to determine how much they are willing to lend you for a home purchase. This involves a review of your credit score, income, and debt to assess your ability to repay the loan. Once pre-approved, you will receive a letter stating the loan amount you qualify for, which can help you shop for homes within your budget with more confidence.