A letter of explanation for a mortgage is a document that provides further details about an applicant’s creditworthiness or financial circumstances. The letter of explanation addresses red flags ...

A letter of explanation should tell the lender why an event happened and describe steps you’ve taken to solve or recover from the issue, if applicable. Not every borrower needs to write a letter ...

Key takeaways. A letter of explanation for a mortgage is a document that addresses red flags that might derail a mortgage approval, such as a period of unemployment or an unpaid credit balance.

Sample Letter of Explanation If your lender asks for a letter of explanation, you’ll want to state what the issue is and, if needed, describe how it was resolved. You won’t need to write a ...