Receiving the commitment letter is the step families I work with get most excited about. In fact, there is good reason, because it is during this phase of the process a borrower finds out if the lender has approved and will commitment to the loan.
Once the appraisal has been completed the appraisal report is shared with the borrower and added to the file. During the underwriting process (Step 4) the appraisal is reviewed. Assuming the appraised value of the property matches or exceeds the purpase price and the underwriter feels the file meets all other qualifications, a commitment letter will be issued.
Often with a commitment, there will be a list of additional documents requested or additional steps that will need to be supplied or taken by the borrower, the realtor and/or the lender these are called 'conditions'.
Conditions include but are not limited to the following:
- Copy of a recent paystub
- Proof of payment on a 1 year homeowner's insurance policy
- Verbal verification of employment
In cases where a commitment is issued with conditions the conditions must be satisfied in order to close the loan.
When I work with families, I find it helpful to have a line by line review of conditions with the borrower, so that they understand what is needed, and the time sensitivity that applies to the request. This review may be done by myself or a member of my team. I find that a conversation at this stage allows me to continue to offer education and share in the joy the news of such a decison brings which is one of my favorite things about what I do.
Next Up: Steps 6 + 7 - Title and Closing
Please Note: This article is provided for illustrative purposes only. It is not an offer or commitment to lend money, and it is not an advertisement for a specific mortgage or a specific interest rate. Contact me to run the numbers for your situation.