Mortgage brokers often tell potential borrowers how important it is to have all their paperwork in order before they even start hunting for a new home. This helps buyers have an idea of the price range they can afford, and expedites the buying process once they find their ideal new home. But what's the difference between pre-qualifying for a property and being pre-approved for its purchase?

        In a nutshell, pre-qualification is an informal way to find out approximately how much you should be able to borrow. It's a no-obligation conversation, during which you would disclose how much you make, how much you owe and how much you have (your assets). With this information, we would arrive at a ballpark figure approximating the mortgage amount for which you would qualify. Armed with this figure, you and your real estate representative can more confidently search for an appropriate property.

        Pre-Approval is a more formal commitment from a lender - an actual assurance to lend you a certain amount - following a more involved application process. You would need to complete an official mortgage application and present evidence of your financial status. Once the lender analyzes this information and does thorough background and credit rating checks, they will conditionally approve you for a specific mortgage amount. Approaching a seller with this document in-hand gives you a firm advantage over another potential purchaser - depending on the property, the seller will know that delays contingent on your obtaining financing are unlikely.