To be clear, there are three terms involved in the mortgage process, they are pre-qualification, pre-approval and mortgage agreement. They are all different and should not be confused. This is about the initial stage.
Mortgage pre-qualification is an estimate of how large a mortgage you can afford based on your financial situation over the past few years.
It is a relatively simple process where you supply your lender with information about your financial situation including income, assets, and debt.
For serious homebuyers, the pre-qualification process is an important first step. But many first time home buyers are not aware of this. As lending guidelines have gotten stricter, it's crucial to know where you stand before setting your sights on a Mansion you just can't afford! Also, a pre-qualification shows your agent or broker that you are officially into the home-buying process and it gets their attention.
When you prequalify for a home loan, you’re getting an estimate of what you might be able to borrow.
This should be an easy and quick process that you can do by yourself in minutes. You can do it without the need to go to the bank or lender saving yourself some time at this stage.
To assist you in estimating how large a mortgage you can afford, here is an example of a mortgage calculator you can use.