Including a Letter of Explanation With Your Bad Credit Mortgage Application
When you turn in a bad credit mortgage application, chances are that you will be required to affix a letter of explanation. This letter of explanation is meant to help those that make the decision decide that your circumstances were, perhaps, extenuating and that you deserve another chance. A letter of explanation should be sincere and accurate, and it should plead your case that your bad credit was the result of extreme circumstances. Or, failing that, it should focus on the steps you are currently taking to remedy your bad credit, and your commitment to be more responsible in the future.
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Here are some specific things you should include in the letter of explanation that goes with your bad credit mortgage application:
· Evidence of identity theft. If you have been the victim of identity theft, your credit can be negatively affected. Additionally, it can take months, and even years, to straighten out the damage done. When you turn in a bad credit mortgage application, and you are a victim of identity theft, your letter of explanation should highlight your problem, and also set forth the actions you have been taking to get everything straightened out. If you went to the authorities (and you should have), including a copy of the police report is helpful, as well as a list of the fraudulent accounts that appear on your credit report.
· Medical bills. In some extreme cases, medical bills can prompt bankruptcy and bad credit. Your letter of explanation should point out the hardships of the accident or medical condition that led to your ruin. If you
had insurance at the time, and it didn’t cover everything, or you reached your limits, this can be helpful as well. However, the lender will not be as sympathetic toward medical bills as toward identity theft.
· Show you are turning over a new leaf. If your bad credit rating is due to foolish credit decisions, it will be hard to prove extenuating circumstances. The best you can do is show that you have taken substantial steps in the past few months to change your ways. You must be able to point out specific instances of paying back debts, and paying down credit cards. If you have learned how to create a budget, include that in your letter of explanation, and point out how you are trying to stick with the budget. Be sure to express remorse for your past choices, and your commitment to being more responsible in the future.
A good letter of explanation can mean the difference between having your bad credit mortgage application rejected or approved. And, if you do a really good job, you might find that your interest rate is not as high as you thought it might be.
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Top Recommended Companies To Refinance With:
(updated ):
Act Now! Lower your monthly mortgage payment!
- Competitive rates and no hidden fees
- Bad Credit OK
- New Purchases, Home Equity & Refinance
- One dedicated mortgage banker from first call to closing
- Quick Application with worthwhile results
If you are looking for a mortgage loan but have "less than perfect credit" this company has options for people with credit problems. Complete a short form and get one dedicated mortgage banker from first call to closing with a simple, straightforward process.
Mortgage rates are still low. Refinance & Lower Your Payment!
- Get Started on a Lower Payment Now!
- America's #1 Online Lender
- Save More and Spend Less!
- No Obligation and Free Expert Advice Another Great "bad-credit" Mortgage Company! QuickenLoans is also a competitive mortgage company for people with all types of credit including poor credit. Refinance or get new mortgage offers from this reputable Web based mortgage lender.
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