Many families dream of homeownership. For most of us, that involves getting a mortgage or a home loan. Applying for a mortgage can be a trying process requiring us to provide all aspects of our personal and financial lives. Unfortunately, it’s also often a sterile process, lacking our dream and why we want to own a home. Sometimes, including a motivation letter for a home loan can help convince a loan processor that you are worthy of that loan.
Home loans are also often referred to as a mortgage. We will use the two terms interchangeably. What you learn here will also apply to a motivation letter for a mortgage, refinancing, or home equity loan.
Of course, no letter is likely to overcome bad credit, poor equity, or other common financial barriers to getting a home loan. However, sometimes showing why you need that loan, sharing your dreams with others, can help to convince a skeptical loan officer to give you the benefit of the doubt. Similar letters have been very effective when making offers on houses, sometimes even when the writer’s offer wasn’t the highest.
Well, we believe that a motivation letter for a home loan or mortgage can help our readers in getting their dream home in the least possible time. Here in the article ahead, we are going to discuss how to write a motivation letter for a home loan and get that loan approved for your amazing new loan. We shall also provide the printable template and a sample letter that you can use to get started on your own motivation letter for a home loan.
Different Kinds of Home Loans
Home loans are often referred to as a mortgage. A loan in general is when you borrow money to be able to complete a purchase or engage in some other activity. With a mortgage, you are borrowing money to purchase your home (or refinance which we will cover in a moment). In exchange, you and the lender agree that they can take ownership of the house or other property if you don’t pay it back.
Sometimes, you are borrowing money to be able to refinance your home. In this case, the home loan is to pay off a previous lender and borrow money from another lender to do that. You might do that to be able to lower your interest rate (and the amount of money that you will owe). Sometimes, you can do that because you have equity in your house and want to be able to borrow more money than you owe.
This could let you pay off other debts, do work on your house or even go on vacation (generally not a good idea). This is often called a refinance.
You can also take out an additional loan (so a second loan) on your house to borrow against the equity in your house. To many people, that equity is money that they can use for other things in exchange for paying interest rates to a bank that are usually pretty low. When you take out an additional mortgage, this is often called a second mortgage.
You agree to give the new bank the house if you don’t pay back the money but the first bank gets the first chance at your house. A marketing term that you may hear for this is called a home equity loan. It’s a loan against the home equity.
There is a special type of home equity loan that will allow you to basically write checks against the loan amount. This is called a home equity line of credit. The nice thing about this is that you don’t have to pay anything until you use that money but it’s usually a higher interest rate.
In case all that wasn’t confusing enough, there is a type of mortgage that is growing in popularity called a reverse mortgage. It’s often used by older homeowners. In this case, you are borrowing against the equity in the house. That money (and interest, etc) is due when the borrower dies, sells the house, or otherwise gives up interest in the house.
Basically, you’re giving the bank your house in exchange for money now. That’s a big simplification but our focus is on applying and not the good and bad of taking out home loans.
With any of these home loans, you need to understand them before you start the process. There will also be an application process. In that application process, you will need to provide financial information, home value information, and a lot more. If you are taking out equity, you may need to provide some evidence of what you plan to do with that money.
In addition to all the financials, it can help to provide a motivation letter for your mortgage or home loan application. A motivation letter, which is similar to a cover letter for a job, is a letter designed to demonstrate to the reader that you are a good candidate for a loan or other position.
You are trying to make an emotional and logical connection with them to show them that you are a safe borrower who is responsible and worthy of borrowing the money. In this article, we will go over how to write a motivation letter for a mortgage or other home loan.
Even though the specifics of the different types of home borrowing differ, the process is similar and this same guidance should help you out no matter what your situation is.
How to Write Your Motivation Letter for Home Loan
When you submit a motivation letter with your home loan application your goal is to show the loan officer how much this means to you. Part of your message is also that you love this home so much, that you will do whatever is necessary to pay that mortgage so that you can stay in your dream home.
When you are drafting your letter, consider why you want that home, in that neighborhood. What will your future look like if you have your dream? Do you plan to raise kids there? Is this a community that you have long admired? When you write your letter, your goal is to show the loan officer what your future looks like, how bright it is, and how they can make it happen.
Ideally, you want to address your letter to the loan officer. It’s always better to address it to someone. Sometimes, this is difficult because when you apply, you may not know who is processing your loan. You can address it to the person who is assisting you with the application, but that isn’t as effective.
It may be necessary, though. Many banks will keep you separate from the loan officer to avoid the kind of bond that you are looking to build.
When you write your introduction, introduce yourself and why you are writing. The introduction can be short but you want to let the loan officer know that you have something to share and to get them to read the rest.
Then you can spend 1-3 paragraphs writing about why you want this home. Ideally, you can write a compelling story. A few ideas to consider include
- Discuss your amazing childhood that you had growing up in a neighborhood and home filled with love and friendship.
- Show them what your future looks like if you are able to buy this home. You could discuss how you plan to raise your kids. Perhaps you plan to open a local business or you have an amazing job in that town that you love.
Stories like these can be very compelling and can build an emotional bond with the loan officer. You want to invest them in your story and convince them that you are a good risk. It’s also helpful if they feel that they hold your dreams in their hands.
If you have a strong financial position or unique financial considerations, you can add them here. One thing to be careful of, though, is that you can actually delay the processing of your loan. This can happen because they may ask you to prove your additional assets, income, or whatever else you mention. If your information is different from your application that could also create problems for you.
There’s nothing wrong with including financial considerations, especially if there are unique issues where an explanation would help. That can be worthwhile and more effective than an emotional play. Just consider what could happen.
Your conclusion should thank them for taking the time to read your letter. You should also open the door to discussing anything with them that will help your application. Be polite and respectful.
Whatever you write, make sure that it’s honest. Don’t tell a fake story and don’t make things up. The loan officer will be looking through a good portion of your life. They may pick up on something that makes your motivation letter show as dishonest. Then, it could actually hurt you.
You want to provide honest, heartfelt information on why you want your beautiful new home!
When To Submit Your Motivation Letter for Home Loan
Most applications aren’t going to allow you to submit a letter directly, so you may need to be creative. Ideally, you want it to get to the underwriter or loan officer. A motivation letter for a home loan or mortgage is most effective when it gets to a decision-maker. So, submitting it too early might mean it doesn’t go anywhere.
After you have submitted your regular application, it will go to underwriting. You will typically be asked for additional documentation. These days, that often means uploading documents on a website somewhere. This is a great opportunity to also upload a copy of your letter.
You can simply write your letter in Microsoft Word or Google Docs. Then, save your letter as a pdf. Then you can upload this document along with your financial documents.
Otherwise, you can submit it as a cover letter or email at some point in the process. Unfortunately, you don’t know for sure when this will be most effective. The underwriter is likely to take a look at uploaded documents so that’s a great opportunity to add your motivation letter.
Other Resources to Help With Your Motivation Letter for a Mortgage
We have written this guide to help you write your own letter. Sometimes, we get asked for more help from our readers. Unfortunately, we don’t have the resources for that but we want to give you any help we can.
Probably the best resource we have found for such help is to look on Fiverr to hire someone. Fiverr is a marketplace where you can hire someone for a specific project. They offer different projects at set prices that you can hire them for. This link will take you to a search for freelancers that do motivation letters specifically. You may need to do some careful due diligence to find someone to help you with a mortgage motivation letter versus one for education or employment. We can’t offer any specific names on there because the freelancers change. We do have an article that gives you some pointers on finding the right person for you, though.
Sample Motivation Letter for a Home Loan
Below, we are including a sample motivation letter for a home loan. Please don’t use this letter. It’s here to give you a framework and some ideas. You want to tell your own story.
Good luck with your home loan and congratulations on your new home!