What Is a Letter of Explanation for a Mortgage?

The file is read by people who will never speak with you. A letter of explanation puts the story on paper so the reviewer does not have to guess.

When one is usually required

• A deposit that is not payroll and is large relative to your income
• A recent credit inquiry, especially if new debt could have been opened
• A gap in employment or a job change during the last two years
• Late payments, a collection, a charge off or a past bankruptcy or foreclosure
• Owning another property, or an address that does not match your credit report

A structure that works

1. 1.What happened, in one or two plain sentences
2. 2.The date and dollar amount, if money is involved
3. 3.Where the money came from or why the event occurred
4. 4.What is attached as proof
5. 5.Your signature and the date

Example

"The $4,200 deposit on June 12 was the sale of my 2014 Honda to Marcus Hall. Attached are the signed title transfer and the buyer's cashier's check copy." That is a complete letter.

Do not guess at facts. If you are unsure of a date or amount, confirm it before writing, because a letter that conflicts with the documents creates a second condition.