Letter of Explanation for Mortgage Application | Sample Template for Business & State

Applying for a loan can be a complicated and stressful process. One of the key requirements from lenders during the approval process is a Letter of Explanation (LOE). An LOE is a formal document that outlines any significant events or circumstances that affected your financial situation and creditworthiness. At BizzLibrary.com, we understand the importance of a well-crafted Letter of Explanation and have created a professional and customizable template to save you time and hassle.

Why Do You Need a Letter of Explanation?

In almost all loan applications, you will be required to submit supporting material to convince lenders that you are a good candidate for approval. This may include pay stubs, bank statements, tax returns, and credit reports. However, any red flags or inconsistencies in your financial history may require an explanation, which is where an LOE comes in.

An LOE helps lenders to fully understand your financial situation and how it has evolved over time. It can be used to explain late payments, credit inquiries, changes in income or employment, or any other circumstances that could affect your creditworthiness. By submitting an LOE, you can demonstrate that you have taken responsibility for your financial situation and that the current situation is under control.

What Should be Included in a Letter of Explanation?

While the content of an LOE may vary depending on individual circumstances, there are some key elements that should be included:

• A brief statement that introduces the purpose of the letter and the reason for writing.
• A detailed explanation of the circumstances that led to any negative or unfavorable events in your financial history, such as missed payments, late payments, or collections.
• A statement of accountability that demonstrates an understanding of the situation and a commitment to improving your finances.
• Any supporting documentation that verifies the information described in the LOE, such as receipts, letters, or invoices.

Download Your Letter of Explanation Template

At BizzLibrary.com, we have created a user-friendly and fully customizable Letter of Explanation template in DOCX format. Our template provides a clear framework for presenting your case and documenting any relevant supporting material. It can be used for a wide range of purposes, such as mortgages, loans, business applications, and more.

Take the stress out of the loan application process and ensure that your finances are presented in the best possible light. Download our Letter of Explanation template today and get started on securing your loan approval!