What to ask instead of which word is on the letter. Did the lender pull a credit report, or take your word for the score? Did it collect pay stubs, W-2s or tax returns, or accept a stated income? Did it verify assets and the source of the down payment? Has an underwriter looked at the file, or only an automated system, or only a loan officer? What conditions remain, and what would make the letter void? How long is it valid? Two letters using the same word can sit at opposite ends of that list, and a seller's agent evaluating competing offers is trying to guess the answers. A letter that names what was verified is worth more than a letter that names a bigger number.
Neither letter is a commitment to lend, and CFPB says so in the same breath. Its guidance states that these letters provide useful information about your likelihood of getting a loan but are not guaranteed loan offers. Separately it notes that in connection with a request, some lenders may issue a written commitment letter valid for a certain period to extend a loan up to a specified amount subject to limited conditions, which is a different and stronger document than either ordinary letter. Whatever the letter says, the loan still depends on the property appraising, on the title being clean, on the borrower's circumstances not changing, and on the file surviving underwriting.
The most useful legal consequence on this page is one almost nobody states. CFPB puts it plainly: even if you have not submitted a formal loan application, a lender that evaluates your creditworthiness and tells you that you do not qualify for a prequalification or preapproval letter must provide you with an adverse action notice. That obligation comes from the Equal Credit Opportunity Act and Regulation B, and an adverse action notice carries the specific reasons for the decision or the right to request them. A "no" at this stage is therefore not a dead end. It is a document that tells you what to fix, which is exactly the information a buyer needs early rather than late.
A preapproval does not automatically start the Loan Estimate clock. The three-business-day deadline for a Loan Estimate runs from an application as Regulation Z defines it, and for these purposes 12 CFR 1026.2(a)(3)(ii) makes that a six-item test: the consumer's name, income, and Social Security number to obtain a credit report, the property address, an estimate of the property's value, and the mortgage loan amount sought. A preapproval request may supply all six, in which case the clock runs, or it may not, most obviously because no property has been identified yet. This is why some borrowers receive a Loan Estimate at preapproval and others do not, and why the absence of one is not evidence of anything wrong.
On credit inquiries, attribute the rule rather than averaging it. Getting a letter usually involves a credit check. Fair Isaac publishes how its own models treat rate shopping: FICO Scores group multiple hard inquiries made within a short time frame into one inquiry, and that shopping period is any 14-day span for scores calculated from older versions of the formula and any 45-day span for the newest versions, with the lender choosing which version is used. Fair Isaac also states that for loans that commonly involve rate shopping, such as mortgage, auto and student loans, FICO Scores ignore inquiries made in the 30 days prior to scoring. Other scoring companies publish their own treatment, so the safe practical rule is to concentrate mortgage shopping into a tight window rather than to rely on any single published number.
A last point about the number on the letter. It states what the lender is willing to advance, which is a statement about the lender's risk tolerance rather than about the borrower's budget. It takes no account of savings goals, childcare, maintenance on the specific house, or the cost of the commute. A preapproval amount is a ceiling to shop under, not a target to reach.
