How do I write a letter of explanation for employment?
The key to writing a great letter of explanation is to keep it short, simple and informative. Be clear and write with as much detail as you can since someone else will need to understand your situation. Avoid including irrelevant information or answers to questions the underwriter didn’t ask.
What should a letter of explanation include?
How to write a letter of explanation
- The date you’re writing the letter.
- The lender’s name, mailing address, and phone number.
- Your full legal name and loan application number.
- Your explanation, with references to any supporting documents you’re including.
- Your mailing address and phone number.
What is a lox document?
Commonly referred to as an ‘LOE’ or ‘LOX,’ letters of explanation are often requested by lenders to gain more specific information on a mortgage borrower and their situation. An LOX can necessary when there is inconsistent, incomplete, or unclear information on a loan application.
What is a Loe letter?
If there’s a discrepancy, such as a history of late payments or an employment gap, you’ll be asked for a letter of explanation (LOE). A letter of explanation for a mortgage clarifies, in writing, any items a lender has questions about in your loan file.
How long should an explanation letter be?
2 pages
There is no specific format to the LoE but it should be short, concise and factual (ideally 1 page, maximum 2 pages) and addresses any issues there may be in your application.
How do you write a lox letter?
How to write a letter of explanation
- Facts. Include all the details with correct dates and dollar amounts.
- Resolution. Explain how and when the situation was resolved.
- Acknowledgment. It’s important that the letter outline why the problem won’t arise again. Recognize if and how you could have avoided this mistake.
What do underwriters look for in letters of explanation?
Specifically, lenders check for derogatory marks on your credit report, such as late payments, delinquencies, charge-offs, bankruptcies, foreclosures and judgments. Underwriters are often required to get letters of explanation for certain application-related issues.
Should I be worried about underwriting?
There’s no reason to worry or stress during the underwriting process if you get prequalified – keep in contact with your lender and don’t make any major changes that have a negative impact.