19 Jun What is a Letter of Intent?
When a borrower applies for a loan to purchase a home, almost every piece of their financial life and history is placed under a microscope. Borrowers often have things show up on credit reports, personal documents and other pieces of information that need further clarification. An example of this is recent credit inquiries on a credit report. In this situation, an underwriter may request a “letter of explanation” asking for additional information.
A letter of explanation is the borrower’s opportunity to share their story with the underwriter and explain why these items may have shown up in the inquiry. Underwriters want to understand all pieces of your finances to ensure you can repay the mortgage loan.
Underwriters are “gatekeepers” of mortgage approval and compare loan guidelines to the borrower’s financial documents to determine if they will be approved for the loan. A letter of explanation assists the underwriter in bridging the gap between discrepancies and reality to verify that everything is in order. Letters of explanation are also commonly requested if the underwriter notices inconsistent income or large, unspecified deposits or withdrawals from the borrower’s bank account.
Are you interested in purchasing a home but worried about your credit score or finances? Call Fairway Fort Lauderdale today to explore your options! At Fairway Fort Lauderdale, our goal is to turn your dream home into a reality. Call us to discuss your financial goals, and we will find a great loan for your needs and work diligently to make the homebuying process wonderful for you.