The terms “pre-qualify” and “pre-approve” sound similar, but they fit at opposite ends of the journey to a loan application.
Pre-qualification should be done early. It’s an informal estimate, without any commitment from a lender, to assess how much you might be able to borrow.
Pre-approval is “just about ready to apply”, typically when you have everything except a purchase contract. It involves completing a loan application, which lets the lender begin verifying your information. Successful pre-approval gives you a “pre-approval letter” that confirms the lender’s offer to lend a specific amount. This letter may be helpful in shopping and negotiating the actual purchase.