Buyers often get pre-qualification and pre-approval confused. Many erroneously think they are the same thing.
The first step in either of these is contact with a mortgage lender. Some go for the online approval process like with Quickenloans.com. This may work fine for many however I am a bit more old fashioned. I prefer the brick and mortar lender like a local credit union, bank or mortgage lender's office.
Pre-Qualification is basically the process where the lender takes the information provided by the borrower and reviews the income, debt, assets, credit history, money available for down payments, employment history, and other information. With this the lender can provide a pre-qualification letter which tells the borrower how much they are qualified to borrow.
Pre-Approval goes further and is the step to take if you intend to purchase a home. In the pre-approval process the loan application is completed and submitted. This is where the lender will pull the credit report, ask for tax returns, pay stubs, and other documentation. This is where you want to be when you are serious about a purchase. At this point you should request a pre-approval letter be provided. Make sure the lender provides you with known closing costs!
When you are ready to make an offer to purchase, a copy of this letter will carry much more weight withe a seller than a pre-qualification letter. The reality is most sellers want the pre-approval letter and nothing less!
Of course the loan approval goes further with appraisals, verification of data again, etc.
Talk to a lender if you are considering a home purchase. In Brevard County, Florida, call me and I can provide you with several lender contacts.