Banks and financial institutions have thousands of requests for approval they need to process. Apart from handling all the incoming mortgage applications, official claims, and documents, it’s also necessary to provide customers with a timely response. Continuous communication is essential to build transparent relationships and maintain the reputation of a reliable lender.
Since in the US, the lending and mortgage sector is the pillar of the financial industry with total mortgages reaching $10.5 trillion, we decided to dedicate this article to loan approval letters. It will be useful to lenders and financial institutions dealing with official offline communications. Keep reading to find out:
- What are loan pre-qualification and pre-approval letters? When to send these loan approval letters and why?
- 3 things to note before using a pre-approval letter template and sending a loan approval letter
- Mortgage pre-approval letter samples and approval letter templates
- How to send a loan approval letter? Conventional mail vs. automation
What Are Loan Pre-Qualification and Pre-Approval Letters? When to Send Them and Why?
Mortgages, like any other large loans, make all parties expend a lot of effort. Real estate agents, lenders, and customers exchange multiple types of communications that differ at each stage of the loan approval process. Here are two main types of loan approval letters that financial institutions deliver to inform borrowers about the possible loan.
Loan pre-qualification notice
Pre-qualification letter is the lender’s response to the borrower’s inquiry that indicates approximate conditions of the future mortgage loan. This information isn’t final and is based solely on the details provided by someone who is buying a home. The applicant supplies the lender with their debt, income, and assets to get an estimated amount they can expect to borrow and learn about available mortgage options. The assessment is usually free and can be done online or over the phone. In just 1-3 business days, the applicant will already be able to find out the offer.
When to send: After a potential borrower contacts you to find out what lending conditions they are eligible for and get some recommendations
Why: It allows the pre-qualified borrower to find out the loan amount and decide whether they can afford the chosen house
Loan pre-approval letter
Pre-approval notice is sent in response to an official mortgage application filled out by the borrower. The applicant gives the mortgage lender access to all the necessary financial records and details, including credit score, credit report, and credit history check. The decision must be provided within 10 business days. The borrower may also be charged an additional fee since such a scrutinous check takes a lot of lender’s time and resources. Pre-approval letters usually include a specific loan amount and interest rates.
When to send: When the borrower fills out a mortgage application and shares their financial background to learn the final results. The pre-approval letter can be delivered after the pre-qualification notice or independently upon the request for an approval letter
Why: To make the real estate application of the borrower more credible and improve their chance to get the house
3 Things to Note Before Choosing a Pre-Approval Letter Template or Sending a Loan Approval Letter
If you have never provided loan approval letters or don’t know how to pick a mortgage pre-approval letter sample, we’ve got you covered. To make a pre-approval letter template look professional, you need to customize it and include all the critical details. More mailing tips below.
Loan Approval Letter Tip #1. See a pre-approval letter template as an element of the big picture
Banks that want to make lending profitable should view loan approval letters as a part of the conversion funnel. Everything starts long before a potential borrower contacts your financial organization with a direct request. That’s why both pre-qualification and pre-approval letter templates must be personalized to the preferences of each individual and take into account their previous interactions with your organization. This will allow you to offer them the most relevant mortgage loan and terms. The understanding of global processes and planning should always happen long before you get in touch with borrowers.
Find more business recommendations for mortgage loan companies, credit unions, and insurers in this article.
Loan Approval Letter Tip #2. Specify the requirements for loan approval
The financial industry has a lot of mandatory requirements that are applicable both to lenders and borrowers. Define what indicators of the applicant’s financial background increase their chances to be approved for a mortgage. Generally, it’s necessary to provide W-2 wage statements, personal and business tax returns for the last two years, bank and investment account statements, employment verification, and other documents that prove the solvency of the borrower. When potential applicants know what they need to supply, banks don’t have to make additional requests and send extra communications. This makes the pre-approval letter template more effective and speeds up mortgage application processing.
Loan Approval Letter Tip #3. Consider automation for mortgage pre-approval letter samples
Of course, you can take one of the ready-made templates and customize it manually adding the necessary details. Nevertheless, this takes way lots of time and manual effort of your organization’s employees. For this reason, most large banks and financial organizations automate customer communications delivered through direct mail and online channels. Advanced tools can automatically pull data from a CRM or database to build a mortgage pre-approval letter sample, fill it out, and initiate the delivery in real-time.
Mortgage Pre-Approval Letter Samples and Approval Letter Templates
If you are about to start writing an approval letter, these mortgage pre-approval letter samples and approval letter templates should be useful. They help to determine the tone of voice and what mandatory fields to include. We’ve scanned multiple sources with approval letter templates to pick the most quality ones. Refer to these mortgage pre-approval letter samples designing your customer communications.
Mortgage Pre-Approval Letter Samples:
Make sure that the mortgage pre-approval letter sample includes borrower and lender’s names, loan amount/purchase price, term, interest rates, and type of property.
How to Send a Loan Approval Letter? Conventional Mail vs. Automated Letter of Approval
Once you made up your mind about the pre-approval letter template and content, choose the optimum delivery method. Basically, you will follow one of these three approaches with varying levels of automation:
- Manual processing of customer information and writing a loan approval letter. This method is only suitable for occasional mailings. Without automation, you won’t manage to handle hundreds of personalized communications every day.
- Automatic generation of customer loan approval letters with further manual printing and mailing. Although this approach already optimizes many repetitive processes, the borrower still needs to organize mail fulfillment.
- 100% automated mail rendering, printing, and shipment with Inkit. Inkit integrates with a CRM system or database of the lender to automatically customize the pre-approval letter templates with variable data printing. The created document is stored in the system for record-keeping, instantly printed, and mailed to the necessary recipient.