What is the difference between pre-qualification and pre-approval?

Pre-qualification is a quick, informal estimate of what a buyer might be able to borrow, based on self-reported income and debt without verification, while pre-approval involves a lender actually verifying income, assets and credit and issuing a conditional commitment to lend a specific amount. Sellers and listing agents generally treat a pre-approval letter as far more credible than a pre-qualification when evaluating competing offers, since it reflects real underwriting rather than an estimate. Joel Boss recommends getting fully pre-approved before touring homes, not just pre-qualified.