![]() Help an underwriter understand how you earn money or why your income changed.Verify the dates of major credit issues like bankruptcies or foreclosures.Clear up any discrepancies on your credit report, like late payments or cosigned loans.A letter of explanation may provide the extra documentation needed to: How a letter of explanation can improve your mortgage approval chancesįederal regulations require that lenders prove they have verified your ability to repay the loans they make. A loan processor or underwriter may request a letter of explanation to strengthen the case for approving your loan application and to provide evidence that your financial profile meets their minimum mortgage requirements. Why do I need to write a letter of explanation?Ī letter of explanation is a written, signed and dated document you prepare to address questions a mortgage lender may have about your loan application.
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