What Is a Letter of Explanation for Mortgage?
A Letter of Explanation for Mortgage is a document that a lender or an underwriter requests from a borrower if they find something unclear in the application. It is a common practice to make sure all of the gathered information is reliable, to clear out any questions related to either your bank statement or credit report.
- Mortgage Explanation Letter.
Using a Mortgage Explanation Letter, borrowers can explain why a certain situation in question came about. Sometimes a borrower is not aware of the problem, so this is an opportunity to clear it out through communication. Often such inquiries are made due to negative credit history, late payments, etc. Among the issues that need explaining might be a pause in the employment or unspecified large transfers into your account. Anything out-of-the-ordinary may need to be described in detail.
Why Do Underwriters Ask for Letters of Explanation?
Underwriters ask for a Letter of Explanation for clarification of the necessary document packet needed for mortgage approval. A lender’s goal is to engage in a contract that will be paid. All employment and financial facts will serve as a safety net to receive regular and timely mortgage payments. It is a request for communication that leads to mutual satisfaction in regard to the desired agreement.
How to Write a Letter of Explanation for Mortgage?
To write a Letter of Explanation for Mortgage you will need to see from the lender’s notice what the subject is. It is of utmost importance not to take it personally and to stay as truthful as possible to keep the prospect of approval for a desired house’s purchase in mind. If there were job discrepancies or changes that are in question, clarify what circumstances lead to it. There’s no need in lengthy escapades, it is best to keep it brief and sincere. The response outline is simple:
- Dear (the name of the underwriter or contact person);
- As a response to your notice, I’m replying with this statement;
- Covey the details about requested issues like address change, credit or employment history, etc.
- Ensure that if there are any other concerns, you are open for communication;
Only Include relevant specifics to present your current situation to the best of your knowledge to get a clear picture and to secure your mortgage approval. Sign, print your name, and date it.
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This letter is prepared by the borrower for a potential lender in order to answer certain questions that have been omitted in the mortgage application or during a personal interview.