When applying for a mortgage you will have to submit an assortment of different documents and information.
This is simply part of the process and while it can take you some time it is done to ensure you receive the level of service you deserve and that there will not be any issues with acquiring the loan you need.
Questions can come up during this process and require you to submit an explanation letter.
An explanation letter is exactly like it sounds and is submitted to provide information and feedback on a specific situation. Such a letter is a chance for you to clarify any questions a lender may have.
These can vary and can include situations involving your employment, financial situation, credit history, and specifics about your personal and work history.
A key aspect of an explanation letter is having the right tone and content. Here are some tips for writing an effective explanation letter.
Six Tips for Writing an Explanation Letter
- Be Detailed: when describing a situation or answering a question you’ll want your information to be as detailed as possible. Figures, dates, and periods should be used when possible to fully explain a situation.
- Stick to the Facts: a letter of explanation should be very logical and focused on the material facts of a situation. Explain what happened and how it led to the current situation that your lender is questioning.
- Keep To The Point: explanation letters should be concise and stick to the key point of the question being asked. Avoid any unneeded details or information unrelated to the question being asked.
- Be Honest: telling the truth is always the best approach when dealing with your lender as it can prevent serious issues in the future. While not every situation works out to your benefit or the way you like it is important to state clearly what happened without any bias or trying to argue your side of the situation.
- Provide Documents If Able: some questions can be related to issues that are easily documented. Things such as bank records, pay stubs, or deposit records can all be useful depending on the specifics of the question asked. Any supporting documentation you can provide answers the question more concisely and speeds up the process.
- Describe a Course of Action If Needed: finally, in some cases, your lender may ask you to do something to correct the situation such as locating records if you do not hand them on hand. If such a request is made be clear on what you plan to do and provide a time frame if able.
Final Thoughts
An explanation letter is a common part of the mortgage process and not anything to be afraid of. However, it is an important piece of correspondence and a certain degree of clarity and professionalism in your statement is expected.
By being direct, professional, and sticking to key facts you can easily answer any questions your lender may have. By including the proper information, format, and tone you can help this process move forward efficiently and avoid any unwanted delays.