Letter Of Offer (LO)
The letter of offer (LO) is a document stating the terms of the home loan that is presented to an applicant upon the approval of the loan.
Also known as a facility letter (FL), it is a banker’s professional duty to explain the key terms contained in the letter of offer to the borrower until he or she understands them.
Some of the key details contained in the LO include:
- Loan amount and tenure
- Interest rate structure
- Repayment date
- Date of facility letter
- Penalty clauses
- Property address
If there are parts, sections, or single terms which you are confused with, you owe it to yourself as a responsible adult to ask question about them.
To ensure that there is a record of key terms explained by a mortgage banker, the borrower might sometimes be requested to sign along side specific sentences to indicate that they have been explained.
When the borrower accepts the terms of the letter of offer, it is signed and there is now an official legal contract between the two parties.
The accepted letter of offer containing the endorsement of borrower and bank representatives will then be sent to the account services department of the bank for the arrangement of funds as required.
The letter of offer is a required document during closing as documented proof of financing being available.
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