What is a mortgage pre-approval?

A mortgage pre-approval is a lender's commitment to provide a loan based on the borrower's financial information. This process involves the lender reviewing the borrower's credit history, income, debts, and assets to determine how much money they are willing to lend and at what interest rate. This commitment typically provides the buyer with a clear understanding of their budget when shopping for a home, as it gives a realistic picture of what they can afford.

This differs significantly from the other options presented. A preliminary agreement for renting a property does not relate to mortgage financing but rather to lease agreements. A free evaluation of property market value refers to property appraisals, which serve to determine the value of a home but do not assure financing. Lastly, a standard loan offer from various banks involves receiving competitive quotes but does not imply that the lender has already assessed the borrower's financial situation to grant a pre-approved amount. Thus, option A accurately encapsulates the essence of what mortgage pre-approval entails.