A loan preapproval is a preliminary evaluation of a potential borrower's creditworthiness and ability to repay a loan. It helps determine the amount of loan a borrower can receive and the interest rate they can expect to pay. A loan preapproval is usually done by a lender or mortgage broker and involves a review of the borrower's credit history, employment, income, debts, and assets.

Getting a loan preapproval is a crucial step in the home buying process, as it gives the buyer a clear understanding of their borrowing power and helps them make an informed decision when shopping for a home. It also demonstrates to the seller that the buyer is a serious and qualified candidate, which can give them an advantage in a competitive bidding situation.

Keep in mind, however, that a loan preapproval is not a guarantee of a loan. Final loan approval will depend on a complete evaluation of the borrower's financial situation, a property appraisal, and other factors.