What Is a Letter of Explanation For Us Mailing Address?
A letter of explanation is a brief and to-the-point document that provides some of the information needed by mortgage underwriters to help them determine whether a loan is a good fit for your particular circumstances. In some cases, the lender will ask for this type of documentation to be included as part of your application. You should also be prepared to answer any questions that are posed by the underwriters as they work to finalize your loan.
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The most obvious reason why you might want to write an explanation letter is to provide a more complete picture of your finances to your prospective mortgage lender. Your credit report may contain several red flags that will keep you from receiving a green light for your application. For instance, you may have been involved in an act that caused your credit score to plummet. If you can find out what happened to you, you can take steps to repair your credit and regain your credit rating. These steps can help you obtain a better mortgage rate or even qualify for a loan in the first place.
While there are many reasons why a person may need to write an explanation letter, the main one is to explain a particular incident on their credit report. This may be the result of an employment or financial gap, an unexpectedly high expense, or a misunderstanding on their part. When a problem like this arises, it’s best to provide the information to the underwriter promptly so that the lending process goes smoothly and quickly.
One example of a possible explanation letter could be if you were to receive a gift from your parents in the form of a cash gift. You can also include a copy of their insurance certificate or their most recent pay stub to justify your claim that you will not be required to repay your debt. Another example of an explanation letter is to explain a medical emergency. By providing a hospital bill, you might be able to convince the underwriter that your health is in order.
There are several reasons why a mortgage underwriter might ask for an explanation letter. For example, if you are applying for a mortgage on your primary residence, the underwriter will be looking to see if you can afford the monthly payments on the home you plan on purchasing. An explanation letter can also help the underwriter ascertain if you will be able to keep up with your mortgage obligations if the situation should arise.
An explanation letter is not only the best way to provide your mortgage lender with the most useful information, but it can also make the loan application process a whole lot smoother. As long as you follow the aforementioned tips, you’ll be well on your way to obtaining the mortgage of your dreams in no time. And don’t forget the most important part: treating your lender as a partner in the purchase of your home.