Letters of explanation are a common part of the mortgage application process. Make sure your letter of explanation includes:
That day’s date
Your lender’s name
Your lender’s phone number and physical address
A subject line that starts with “RE:” and has your name, the number of your application, and any other identifying info
One or more paragraphs that provide information the lender asked for (Be as detailed as possible is necessary and include dates, dollar amounts, account numbers, etc.)
Any supporting documents that provide identification and back up your claims (copies of bills of sale, title transfers, marriage licenses, etc.)
Your full legal name as it appears on your mortgage application, signed and printed
Your spouse or partner’s name if they’re on the loan application with you
Your full mailing address and 10-digit phone number
A polite closing
It’s best when writing a letter of explanation to make it short and to the point. You’ll want it to provide the recipient with the information they need, however. Be clear and offer as much relevant detail as possible since the person reading the letter will need to understand your situation. Still, avoid including unnecessary details or answering questions the underwriter never asked. Use a polite tone but try not to be overly friendly or use emotional language.
After you finish writing the letter, edit for typos or grammatical errors. Send the letter in a timely manner to keep your mortgage application on track.
Explanation Letter Template
Below is a sample letter of explanation you can use as a template, if you wish, to write an explanation letter of your own.
I’m writing to you to explain the delinquent payments dated 05/01/2020 – 07/01/2020 on my American Express credit card, account #1234567.
On April 15, 2020, I was laid off from my job due to the COVID-19 pandemic. Because I was unemployed, I was unable to make my minimum credit card payments for this account for May and June. I started a new job on June 20, 2020 and was able to make my July payment.
I’m still working at the same company today and, since July 1, 2020, I have not been late on, or missed, any payment on this credit card account. Enclosed is a copy of my statements from July 1, 2020 until now as proof of my good standing and on-time payments with this account.
The letter of explanation addresses red flags that might derail your approval: why you were unemployed for a period of time or why there's an unpaid balance on your credit report. Not every borrower needs to write a letter of explanation. If you do, your lender will request one.
Ideally, your letter of explanation can be anywhere from 500-1500 words. If you're writing just to address the issues raised by the visa officer, then it may likely not get to 1000 words. However, if you're submitting your LOE together with your first application, it could get up to 1000 words.
What is a letter of explanation for a mortgage lender? A letter of explanation clarifies negative marks on your credit report and assures an underwriter or lender that you are capable of paying off a mortgage.
A Letter of Explanation is not a necessary document to get a Study Permit in typical situations. However, a letter of explanation can enhance your chances of getting a Study Permit amidst numerous applications.
Sincerely, Sincerely Yours, Regards, Yours Truly, and Yours Sincerely. These are the simplest and most useful letter closings to use in a formal business setting. These are appropriate in almost all instances and are excellent ways to close a cover letter or a job inquiry.
Letters are also powerful tools to convey kinship and thoughtfulness. The idea that someone has taken time out of his or her day – everyone has other stuff to do – to sit down and write, find an envelope, look up the address, get a stamp and finally post it can really boost how someone feels and lift a mood.
It's best when writing a letter of explanation to make it short and to the point. You'll want it to provide the recipient with the information they need, however. Be clear and offer as much relevant detail as possible since the person reading the letter will need to understand your situation.
A letter explaining bad credit should be honest and transparent. Acknowledge your financial situation, and explain any extenuating circ*mstances that may have contributed to it. Honesty is critical since any lies or omissions will inevitably come to light and could jeopardize your job prospects.
Writing a letter or email can be a good option if you're worried about saying things the right way, if you want to give the person time to think through their response, or if you don't feel comfortable talking in person. Don't worry if the person you come out to doesn't react the way you'd hoped right away.
Regardless of whether your share it or not, letter writing can be a cathartic exercise to help you: Get clarity about how you feel about a situation.Release negative feelings or thoughts.Share gratitude and positive feelings toward a person or circ*mstance.
A letter of explanation enables the borrower to answer any questions a lender might have about the loan application. Lenders are often required to get letters of explanation for information present on your credit report, such as delinquencies, late payments, bankruptcies, and foreclosures.
Introduction: My name is Gregorio Kreiger, I am a tender, brainy, enthusiastic, combative, agreeable, gentle, gentle person who loves writing and wants to share my knowledge and understanding with you.
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