How does pre-qualification differ from pre-approval in mortgages?

Pre-qualification in the context of mortgages is a preliminary step in the borrowing process where lenders provide potential borrowers with an estimate of how much they may be able to borrow based on self-reported financial information, such as income and debts. This process generally requires minimal documentation. As a result, pre-qualification typically does not involve a thorough verification of the provided information, allowing for a quick and easy assessment of borrowing potential. This lack of verification is a key distinguishing feature of pre-qualification compared to pre-approval, which involves a more rigorous assessment of the borrower's financial situation.

In contrast, pre-approval usually requires a detailed review of the borrower’s financial documents and a credit check, making it a more reliable and binding indication of one's eligibility for a mortgage. Therefore, the identification of pre-qualification as a stage where no verification of documents occurs accurately captures its essence within the mortgage process.