A mortgage payoff letter can come in two forms. One form tells borrowers the remaining principal amount and interest they have to pay to close out the loan.What Is a Letter of Explanation? A letter of explanation is a document that the lender may request to learn more about your specific financial situation. This form is a statement of final loan terms and closing costs. Interested in borrowing money for a mortgage, personal loan, or auto loan? Read through these common FAQs with Fifth Third Bank to learn more and apply.