These two words while mistakenly used interchangeably couldn’t be further from the same.
Prequalification VS. Preapproval
What’s a prequalification? A prequalification is an estimate of the loan amount ja lender may be willing to loan you based on preliminary information you provide, which can help you estimate your purchase price range. A prequalification is really just a general figure to help you get started shopping for a home. You can get prequalified by talking to a lender about your income, assets, debt, and the amount of down payment you’re likely to make. However, this is an informal estimate that doesn’t involve and kind of commitment from either you or the lender.
What’s a preapproval? A preapproval is slightly more formal than a prequalification and means that your lender has tentatively committed to an amount for your home loan. IN order to get preapproved you need to provide your lender with documentation regarding your income, assets, and debts. You’ll pay a fee and your lender will conduct a credit check. With a preapproval, you’ll receive a preapproval form that outlines the approximate mortgage loan amount and monthly payment for which you qualify, subject to certain conditions or documentation.
(information provided from wells fargo home mortgage)
A preapproval allows the buyer and seller to have a greater level of confidence in the transaction and is usually required as part of the Agreement of Sale Package. The best bet in getting your preapproval letter is using the Mortgage Brokerage Firm that provided the preapproval to provide the mortgage as it can accelerate the mortgage process.