What is the difference between prequalification and preapproval?

Prequalification is an estimate of the loan amount you can receive based on a preliminary discussion with your lender. A preapproval is the next step after being prequalified. You will fill out an official mortgage application, provide more detailed information about your finances (both income and debts), and consent to have your credit checked.

The lender will take a look at everything, and determine how much the bank will approve for your mortgage. You’ll have to provide your preapproval letter to your agent and to the seller when you make an offer on a house.