Contrary to popular belief, being pre-qualified for a mortgage doesn’t mean you’re pre-approved for a home loan.Getting pre-qualified is the first step in the mortgage process. You supply an overall financial picture to a bank or lender. It can be done over the phone or the Internet, and no one looks at your credit report. The lender reviews your information and gives an estimate of the mortgage amount for which you would qualify. This is the time to discuss your goals and needs with a lender, who can provide a suitable recommendation. The next step is getting pre-approved. You complete a mortgage application and pay an application fee, in addition to providing documents so the lender can perform a financial background and credit rating check. The lender will then reveal the exact mortgage amount for which you’re approved, allowing you to start searching in that price range. Sellers will know you’re one step closer to obtaining the actual mortgage, and you’ll know how much you can afford. Banks issue a loan commitment when they approve you and the house in question, which means the home should be appraised at or above the sale price. Banks only send the loan commitment letter when they’re certain they’ll lend the money. For more information, see Pre-Qualified Vs. Pre-Approved - What's the Difference?