In the mortgage application process, a Letter of Explanation (LOVE) is a written document that provides a detailed explanation or clarification for any specific information or circumstances related to the borrower's financial history, credit report, employment, or other relevant factors. It serves as a supporting document that helps the lender understand the borrower's situation and mitigates any potential concerns or red flags. The Letter of Explanation template for mortgages is a standardized format that simplifies the process of crafting a comprehensive explanation. While there isn't a universal template, lenders often have their own preferred format. However, the essential components and guidelines remain relatively consistent across different LOVE templates. Key elements to include in a Letter of Explanation for mortgage are: 1. Heading and Contact Information: Start the letter with your name, address, and contact details. Similarly, include the lender's name and address, ensuring the LOVE is addressed to the correct person or department. 2. Date: Mention the date the letter is being written. 3. Subject Line: Use a concise and descriptive subject line that clearly highlights the purpose of the LOVE, such as "Letter of Explanation — Credit History". 4. Introduction: Begin with a courteous salutation and clearly state the purpose of the letter. For instance, if explaining employment gaps, mention that the LOVE aims to address those gaps in detail. 5. Explanation Details: Provide a thorough and chronological account of the circumstances or events that require clarification or explanation. If addressing credit issues, describe why those issues occurred, how they were resolved, and any steps taken to prevent recurrence. Be concise, factual, and transparent, but avoid unnecessary personal details. 6. Supporting Documentation: Whenever possible, attach relevant supporting documents, such as medical records, divorce decrees, or pay stubs, to substantiate the explanation provided. 7. Conclusion: Conclude the LOVE with a summary statement that reiterates your commitment to maintaining financial responsibility and highlights any positive changes or proactive measures taken. 8. Signature: Sign the letter using your legal signature and include your printed name below. Different types of Letter of Explanation templates may cater to various situations or aspects of a borrower's financial background. Some common types include: 1. Employment Gap Explanation: Addresses gaps in employment history and provides valid reasons, such as educational pursuits, health issues, layoffs, or personal reasons. 2. Credit History Explanation: Clarifies any negative entries on the credit report, such as late payments, collections, bankruptcies, or foreclosures, and highlights any extenuating circumstances that may have contributed. 3. Source of Funds Explanation: Explains the origin of large deposits in bank accounts or identifies funds borrowed for the down payment or closing costs. 4. Residency Explanation: Clarifies any changes in address within a specific time frame or in a short period before the mortgage application, ensuring the lender understands the reason behind such changes. Remember, the Letter of Explanation should be concise, honest, and well-structured while providing sufficient information to address any concerns or gaps in the borrower's financial history. It is essential to consult with your lender or loan officer for any specific requirements or preferences they may have when using their template.
Letter Of Explanation Template For Mortgage
Description letter of explanation mortgage template
How to fill out Letter Of Explanation Template Mortgage?
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