Loan Pre-Approval Letter

A loan pre-approval letter is a document from a lender indicating that you are conditionally approved for a loan up to a certain amount based on a preliminary review of your credit and financial information. It shows sellers that you are a serious buyer with the financial backing to complete a purchase, such as a home or vehicle.

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The letter typically includes the amount of the loan a customer is pre-approved for, the loan term, and any specific conditions or contingencies (such as verification of income or assets). It also includes an interest rate or estimated rate and the lender’s contact information, which can be shared with sellers.

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A loan pre-approval letter is more formal and involves a more detailed review of a customer’s financial background, including a credit check and verification of income, assets, and debts. In contrast, pre-qualification is a less formal estimate of how much someone might qualify for, often based on self-reported information. Pre-approval carries more weight with sellers since it shows the recipient has already passed the lender’s initial checks.

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A loan pre-approval letter is typically valid for 60 to 90 days, depending on the lender. After this period, the recipient may need to update their financial information and undergo another review to renew the pre-approval. It’s important to ensure the letter is current when making offers to purchase.

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Yes, as a lender, sending loan pre-approval Letters via direct mail can add a professional touch and ensure your clients receive a physical copy of the document. Direct mail can be particularly useful for clients who prefer hard copies or when you want to provide a more formal presentation of the pre-approval. However, some clients may also prefer receiving the letter via email as well for faster processing and ease of sharing with sellers or real estate agents. Offering both options ensures flexibility for your clients' needs.

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