I am happy to inform you that Doe International has approved your loan application for $33,000 with interest to be paid at a 9.8 Annual Percentage Rate. As indicated in earlier correspondence, we expect the loan to be paid in full within seven years. An amortization schedule is enclosed. Please call me sometime during the week so that we can draw up the final papers.
We have approved your request for a home equity loan in the amount of $10,000. The term of the loan is fifteen years. The interest rate on the unpaid balance will be calculated according to our standard formula and will start at 9%. Your first payment of $210 is due on July 25. Thank you for choosing Doe Savings and Loan. Please call us at 555-5555 if we can serve you further.
Your application went through underwriting successfully, and we will extend to you the $888 loan immediately. Please come to my office to review the terms and sign the promissory note. The terms are as outlined on the application. In brief, the first payment of $50 is due thirty days after disbursement of the principal. Subsequent payments are due on the first of every month thereafter. Our 10.9% interest rate is good for the entire term of the loan.
We are pleased to approve your home equity loan application. The loan amount is $50,000, the term is 30 years, and the annual interest rate is 8%. Enclosed is a disclosure form that outlines the terms of the loan. If you have any questions, please call our local branch and a representative will help you.
I am pleased to inform you that we have approved your loan. As we discussed, the loan is for five years at an Annual Percentage Rate (APR) of 7%. Your first payment of $200 is due on May 31. The attached consumer loan forms disclose the terms of your loan in more detail. You should refer to them for more specific information. If you have further questions or needs, please give me a call.
Receiving a loan approval letter is an exciting milestone on the path to purchasing your dream home or securing financing for a major project. This official document from a lender confirms that your loan application has been accepted and states the approved loan details.
But what exactly should a loan approval letter include? And how can you ensure yours effectively conveys the key information while maintaining a professional tone?
In this comprehensive guide, I’ll walk through the essential elements of a well-written loan approval letter using clear examples. Whether you’re a lender seeking tips on structuring your letters or a borrower wanting to know what to look for, these insights will help you create professional documents that align with industry best practices.
Overview of a Loan Approval Letter
A loan approval letter is a formal notification sent by a lender when they’ve agreed to offer financing to a borrower. It outlines the specific loan terms like the type, amount, rate, fees, and repayment structure. Approval letters are commonly used for:
- Mortgages
- Auto loans
- Personal loans
- Business loans
For the borrower, receiving one of these letters means their application has passed the lender’s verification and underwriting process. But it doesn’t guarantee the loan until closing requirements are fulfilled.
Now let’s look at what information needs to be included in a properly formatted approval letter.
Key Sections to Include
While individual lenders may customize their own templates, most approval letters contain these core sections:
1. Introductory Greeting
- Addressed to the applicant by name.
- Establishes the letter is regarding their recent loan application.
Example
Dear John,
Thank you for your recent loan application with [Lender Name],
2. Notification of Approval
- Clear statement that the loan application has been approved.
- Specification if approval is conditional on any other requirements.
Example:
We are pleased to inform you that your application for a home mortgage loan has been approved…
3. Overview of Loan Terms
- Type of loan (mortgage, auto, personal, etc.)
- Amount approved
- Interest rate and term length
- Payment amount and schedule
- Fees or closing costs
Example:
You have been approved for a 30-year fixed rate mortgage in the amount of $250,000 at an interest rate of 5% APR. Your monthly principal and interest payment will be $1,342. Additional closing costs are estimated at $5,000…
4. Expiration and Validity Details
- Loan approval conditions and expiration date
- Next steps for final approval if applicable
Example:
This loan approval is valid for 30 days from the date of this letter, contingent on a satisfactory home appraisal and underwriting conditions. Please contact us to move forward with the appraisal process…
5. Contact Information
- Loan officer name, phone, email
- Instructions for accept/decline
Example:
Please contact me directly at 555-1234 or [email protected] if you wish to move forward with this mortgage loan approval. We look forward to helping you finalize the financing for your new home.
Best regards,
John Smith
Loan Officer
ABC Loans
This clear, concise structure allows the borrower to quickly grasp the key approval terms and next steps needed.
Helpful Approval Letter Examples
Now that we’ve covered the main components, let’s look at two full loan approval letter examples for illustration.
Mortgage Loan Approval Letter
April 1, 2024
Dear Cindy,
Thank you for your recent mortgage loan application with ABC Loans. We are pleased to inform you that your request for a home mortgage loan has been approved.
You have been approved for a 30-year fixed rate mortgage in the amount of $250,000 at an interest rate of 5% APR. Your monthly principal and interest payment will be $1,342 based on this amount and rate.
Additional estimated closing costs are $5,000, including origination fees, appraisal costs, and title charges. Your total monthly payment including property taxes and home insurance is estimated to be $1,986.
This loan approval is contingent on a satisfactory home appraisal, credit check, and final underwriting approval. Please contact us as soon as possible to move forward with the appraisal process.
We look forward to partnering with you to finalize this mortgage loan approval and purchase your new home. Please reach out with any questions.
Regards,
John Smith
Loan Officer, ABC Loans
[email protected]
555-1234
Business Loan Approval Letter
May 15, 2024
Dear Mr. Lee,
Thank you for your recent business loan application with XYZ Financial. We are pleased to inform you that your request for a commercial real estate loan has been approved.
You have been approved for a 5-year adjustable rate commercial loan in the amount of $500,000 for the purchase of 123 Main Street. The initial interest rate is 7% APR, adjustable after year 1.
Your monthly principal and interest payment is $3,631 based on a 20-year amortization schedule. Total origination fees for this loan are $5,000.
This approval is contingent on a satisfactory commercial appraisal, business credit check, and final loan underwriting. Please contact me as soon as possible to move forward with the appraisal process.
I look forward to working together to finalize this commercial loan approval for your business. Feel free to reach out with any other questions.
Sincerely,
Jane Doe
Loan Officer, XYZ Financial
[email protected]
555-3456
These real-world examples demonstrate how a loan approval letter should clearly convey all the necessary information to the borrower while maintaining a professional, friendly tone.
Key Takeaways
-
Loan approval letters formally notify borrowers that their financing application has been accepted by the lender.
-
Well-structured approval letters include key sections like the greeting, approval notification, loan terms, validity details, and contact information.
-
Concise, specific language removes ambiguity and helps the borrower grasp the specifics.
-
A friendly yet professional tone establishes an open line of communication between lender and borrower.
By following these best practices and examples, lenders can create loan approval letters that will be well-received by borrowers and effectively move the lending process forward. The approval letter sets the stage for a smooth final loan closure and long-term relationship.
Key Phrases for Step 2
- according to the terms set forth
- APR will be
- at an annual interest rate of
- balance will be due on
- first payment is due on
- funds will be available on
- interest at a rate of
- its okay to pay
- on the application form
- payment will be due on
- repayment period will be
- repayment terms will be
- start paying me back
- subject to the terms of
- unpaid balance will accrue interest at a rate of
- will repay me by
- will be compounded monthly
- will transfer the amount directly into your account
- with interest accruing at
Key Phrases for Step 1
- am pleased to grant you
- am pleased to inform you
- am willing to lend you
- are able to lend you
- enclosed is a check for
- funds will be available to you on
- has been approved
- have approved your loan
- loan has been approved
- money you requested
- on execution of a
- the loan you applied for
- want to let you know
- will be a pleasure to
- will be happy to lend you
- wish to notify you
- your loan application
- your loan has been approved
- your application for a loan
How To Understand Your Pre-Approval Letter
What should be included in a mortgage pre-approval letter sample?
A mortgage pre-approval letter sample outlines the details that should be included in the letter. The interest rate and loan amount are two specific requirements that must be included. Additionally, the loan term and type of loan are also added.
How a home loan approval letter sample can help financial institutions?
Home loan approval letter samples can help financial institutions to build and send letters to their applicants speedily and easily. They do not need to put in any manual effort or set up a separate team for filling in letters and taking care of printing and mailing them on time.
Are pre-approval letters a guarantee of loan approval?
A pre-approval letter is not a guarantee of loan approval. It is just a part of the loan approval process, which is why it is called ‘pre-approval.’ You need to take care of certain things while applying for a pre-approval letter and also after getting it. Do not quit your current job or make a career change.
Is a pre-approval letter a legal document?
A pre-approval letter is not a legally binding document or a guarantee of loan approval. However, it can be helpful in securing good deals from sellers. Banks issue many pre-approval letters each month to expedite loan application processing and maintain their daily operations. Also Read: Why The Mortgage Direct Mail Marketing Is the Best Option