Help with explanation letter?

[Anonymous]

We've been asked to provide an explanation letter due to a reduction in income for my husband from 2007 to 2008.  It's easy enough to explain - he went back to school full-time 8/2007 and has been working part-time, in school full-time, and taking care of our son part-time since then.  He's due to graduate in May '10 and will then resume working full-time, either at his current p/t job or in his field.

What I'm trying to figure out is how much of that information the underwriter will need or want to see?  I have only been able to find examples of letters for derogatory items or self-employment; it seems that our case is not that common.  I'm ready to write everything out, including the numbers and the fact that he'll be working f/t next May, but I've also seen advice to keep these letters 'short and sweet'. 

I need to have this to our lender on Monday (11/2), and I'm hoping that someone will have an experience to share before I turn in either War and Peace or something that looks like the ingredient list for an apple.

Thanks for any advice you can offer!

[hawkeye33]

I don't have experience with your particular situation, but in general, I would recommend lots of detail in as few words as possible. In other words, don't drone on and on, but as many compelling reasons you can think of to ease the minds of an underwriter are worth including.

Is your husband working part time now for the same company for whom he was working full time before going back to school, or is it a different job entirely? If I were an underwriter and I were reviewing your case, the most influential information you could provide would be that when your husband is finished with school, he has the option to resume his previous full time job or has a job waiting for him at a higher rate of pay with the same company.

That is, in this job market, it could be a crap shoot that your husband would be able to get a new full time job in a new or advanced field, which could make an underwriter leary. If he has a job waiting for him, even if it's his previous job at 2007 rate of pay, that gives them firmer ground on which to base income calculations.

[Anonymous]

Hi, Hawkeye,

Thanks for your input.  After graduation, he will be able to go back to full-time status at his current part-time job, and I've noted that in my draft. I'm glad you mentioned this, because I was contemplating leaving that information out since it went beyond answering the question, "Why was your 2008 income less than your 2007 income?"

I appreciate your help!

[Anonymous]

Here's what I submitted to our loan officer earlier today, edited to be a little more generic for anyone else whose income declined due to a return to college:

Dear Sir or Madam: 

This letter provides an explanation for the decline in my income from YEAR to YEAR as reflected on my Federal income tax returns for those years.

During the first ## months of YEAR, I worked approximately ## hours per week. In MONTH YEAR, I returned to college full-time and my availability for work decreased as a result.  I worked an average of ## hours per week throughout YEAR while attending school full-time.

In YEAR, I have continued to work part-time with an average of ## hours per week.  In YEAR, I will continue to work part-time as I complete my degree. After graduation in MONTH YEAR, I will return to full-time work at my current place of employment.  I do not anticipate a similar decline in my income as seen between YEAR and YEAR in the future.


Sincerely,

Mr. Mollop

[ArmyStrong]

That sounds perfect to me. Concise and to the point. Good luck with it!

[DallasLoanGuy]

What happened?

How did you deal with it?

What steps have you taken to make sure it doesn't happen again?

THAT is what the u/w wants to see.

*i didnt read the above... just throwing this out there for the readers*