Q:

What is an approval letter?

A:

Quick Answer

An approval letter is any letter written to grant official approval of a request. Approval letters are typically written in response to requests for approval regarding employee days off, business expenses, building projects and financing.

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Full Answer

One specific and common type of approval letter is the pre-approval letter provided by a mortgage lender to a prospective home buyer shopping for a new home. A pre-approval letter is issued after a mortgage lender has done due diligence to confirm the home buyer's financial wherewithal to make the purchase. Typically, a pre-approval letter states the amount the prospective buyer is approved to borrow. A pre-approval letter carries more weight than does a prequalification letter when making an offer on a house.

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