Prequalification is the process of speaking to a lender about a possible home loan. Ordinarily this can be done over the phone. You will provide them with the information described above, and they in turn will give you an estimate of what size home loan you might receive. This estimate works assuming that the information you have given them is accurate, and is not a guarantee of anything.
People often think because they are prequalified they are sure to get a loan when they find the home of their dreams. This is not necessarily true. At this point in the loan process there has been no credit check, and the lender has not yet verified any of the information you have provided. There may be things on your credit report that are inaccurate or that you have forgotten about that may inhibit the loan process or affect the loan amount.