Mortgage Explanation Letter: 17 Samples to Get Approved

[Date]

[Lender’s Name]
[Lender’s Address]

Subject: Explanation for Late Payment on [Account Name and Number]

Dear [Lender’s Name],

I am writing to explain a late payment on my [Account Name and Number] account in [Month, Year]. This was due to [Briefly explain reason, e.g., a temporary job loss, unexpected medical expenses, or travel]. I have since [Explain corrective action, e.g., resumed regular payments, set up automatic payments]. I understand the importance of timely payments and have taken steps to ensure this does not happen again. Thank you for your consideration.

[Date]

[Lender’s Name]
[Lender’s Address]

Subject: Explanation for Large Deposit on [Date]

Dear [Lender’s Name],

This letter explains a large deposit of $[Amount] made into my account on [Date]. The funds were from [Source of funds, e.g., a gift from family, sale of a personal asset, or bonus from work]. Enclosed is [Supporting documentation, e.g., gift letter, sales receipt, or pay stub] as proof of the source. Thank you for your consideration.

[Date]

[Lender’s Name]
[Lender’s Address]

Subject: Explanation for Employment Gap

Dear [Lender’s Name],

This letter explains a period of unemployment between [Start Date] and [End Date]. During this time, I [Explain reason for gap, e.g., focused on family matters, pursued further education, or was actively seeking employment]. I am now employed with [Current Employer] since [Start Date] and am earning $[Salary]. I am committed to maintaining stable employment. Thank you for your consideration.

[Date]

[Lender’s Name]
[Lender’s Address]

Subject: Explanation for Credit Inquiry on [Date] from [Company]

Dear [Lender’s Name],

I am writing to explain a recent credit inquiry from [Company] on [Date]. I initiated this inquiry to [Explain reason for inquiry, e.g., compare interest rates for a car loan, explore refinancing options]. I did not proceed with [The loan or credit application] at that time. Thank you for your consideration.

[Date]

[Lender’s Name]
[Lender’s Address]

Subject: Explanation for Collection Account with [Collection Agency]

Dear [Lender’s Name],

This letter explains a collection account with [Collection Agency] from [Date] for $[Amount]. This resulted from [Explain reason for the collection, e.g., a disputed medical bill, an oversight due to relocation]. I have since [Explain resolution, e.g., paid the debt in full, settled the debt for a lesser amount, or am disputing the debt]. [If paid/settled, provide proof of payment]. Thank you for your consideration.

[Date]

[Lender’s Name]
[Lender’s Address]

Subject: Explanation for Charge-Off Account with [Creditor]

Dear [Lender’s Name],

I am writing to explain a charge-off account with [Creditor] that occurred in [Month, Year]. The charge-off was a result of [Explain the circumstances that led to the charge-off, such as a job loss, illness, or unexpected financial hardship]. Since then, I have [Explain what steps you’ve taken to improve your financial situation, such as securing new employment, creating a budget, or working with a credit counseling agency]. I am now committed to managing my finances responsibly. Thank you for your consideration.

[Date]

[Lender’s Name]
[Lender’s Address]

Subject: Explanation for Past Bankruptcy Filing

Dear [Lender’s Name],

I am writing to address my past bankruptcy filing, which was discharged on [Date]. The bankruptcy was a direct result of [Explain the primary reason for the bankruptcy, such as a major medical event, a business failure, or an overwhelming amount of debt]. Since the discharge, I have [Explain the steps you’ve taken to rebuild your credit and manage your finances, such as maintaining a stable employment record, paying bills on time, and avoiding new debt]. I am now in a much stronger financial position. Thank you for your consideration.

[Date]

[Lender’s Name]
[Lender’s Address]

Subject: Explanation for Financial Impact of Divorce/Separation

Dear [Lender’s Name],

I am writing to explain the impact of my divorce/separation, finalized on [Date], on my financial situation. The divorce/separation resulted in [Explain the specific financial impacts, such as a decrease in income, division of assets, or assumption of new debts]. I have since [Explain how you’ve adjusted to the financial changes, such as finding new employment, creating a budget, or refinancing debts]. I am now managing my finances independently and responsibly. Thank you for your consideration.

[Date]

[Lender’s Name]
[Lender’s Address]

Subject: Explanation for Past Short Sale/Foreclosure

Dear [Lender’s Name],

I am writing to address the short sale/foreclosure of my property at [Address] on [Date]. This unfortunate event was caused by [Explain the circumstances leading to the short sale/foreclosure, such as a job loss, illness, or a decline in the housing market]. Since then, I have [Explain the steps you’ve taken to rebuild your credit and financial stability, such as securing new employment, saving for a down payment, and improving your credit score]. I am now in a much stronger financial position and am ready to become a homeowner again. Thank you for your consideration.

[Date]

[Lender’s Name]
[Lender’s Address]

Subject: Explanation for Gift Funds Used for Down Payment

Dear [Lender’s Name],

This letter is to confirm that $[Amount] of the funds for my down payment are a gift from [Donor’s Name], my [Relationship to donor]. These funds are a gift and are not expected to be repaid. A gift letter from [Donor’s Name] is attached for your review, along with [Donor’s bank statement or other supporting documentation, if requested]. Thank you for your consideration.

[Date]

[Lender’s Name]
[Lender’s Address]

Subject: Explanation for Fluctuations in Self-Employment Income

Dear [Lender’s Name],

I am writing to explain the fluctuations in my income as a self-employed [Your Profession]. While my income may vary from month to month, my overall business has been consistently profitable. The fluctuations are primarily due to [Explain the reasons for the income variations, such as seasonality, project-based work, or changes in the market]. I have attached my tax returns for the past two years, as well as my profit and loss statements, to provide a comprehensive overview of my income. Thank you for your consideration.

[Date]

[Lender’s Name]
[Lender’s Address]

Subject: Explanation Regarding Co-signed Loan

Dear [Lender’s Name],

This letter explains that I co-signed a loan for [Name of borrower] on [Date] for [Purpose of loan, e.g., a car loan, student loan]. While I am responsible for the debt if [Name of borrower] defaults, they have been consistently making timely payments and are fully responsible for the loan. [Optional: You can add any further information about the borrower’s financial stability or your understanding of their ability to repay the loan]. Thank you for your consideration.

[Date]

[Lender’s Name]
[Lender’s Address]

Subject: Explanation for Underemployment

Dear [Lender’s Name],

I am writing to explain that currently I am underemployed, working at [Current Job], whereas previously I worked in [Previous Job] earning [Salary]. I am now working to get into a better position to do the work I’ve previously done. [Explain in detail why you’re underemployed, what you’re doing to get back into the field, and the time expectations]. I’m committed to continue providing timely and accurate payments for my bills and accounts. Thank you for your consideration.

[Date]

[Lender’s Name]
[Lender’s Address]

Subject: Explanation for Identity Theft

Dear [Lender’s Name],

I am writing to explain I was the victim of identity theft which is the cause of recent accounts or debts that you are reviewing with my loan. I have since contacted the Credit Bureaus for lock down services to not allow new accounts to be opened. Please note that [List the Accounts and reasons you know or believe are opened due to identity theft]. I am committed to correcting my financials and maintaining timely and accurate payments for my bills and accounts. Thank you for your consideration.

[Date]

[Lender’s Name]
[Lender’s Address]

Subject: Explanation for Gambling Losses

Dear [Lender’s Name],

I am writing to explain recent gambling losses that you may see in my account history. I have stopped gambling and am receiving or have completed counseling services regarding responsible financial decisions. I am committed to rebuilding my financials and maintaining timely and accurate payments for my bills and accounts. Thank you for your consideration.

[Date]

[Lender’s Name]
[Lender’s Address]

Subject: Explanation for Unusually High Spending

Dear [Lender’s Name],

I am writing to explain recent higher than usual spending that you may see in my account history. This was due to [Explain briefly the higher than usual spending reasons.] [If an account has been closed] I have since contacted and closed that account and have committed to staying within my means for spending. I am committed to maintaining timely and accurate payments for my bills and accounts. Thank you for your consideration.

[Date]

[Lender’s Name]
[Lender’s Address]

Subject: Explanation for Cash Deposits without Clear Source

Dear [Lender’s Name],

I am writing to explain recent cash deposits without a clear source in my account history. These are the results of sales from various activities [Explain briefly the reasons of cash deposits like hobbies, and personal sales.] I am committed to being more diligent about documenting and accounting for future cash deposits. I am committed to maintaining timely and accurate payments for my bills and accounts. Thank you for your consideration.