Secure Your Mortgage Commitment Letter
Our lenders are ready to offer you a mortgage commitment letter upfront to help you succeed in your home buying journey. Whether it’s your first or third time purchasing a home, we recommend getting your loan commitment letter first before finding your new property. This way, you can show home sellers and real estate agents that you’re credit-worthy and a serious home buyer.
What is a mortgage commitment letter?
A mortgage commitment letter is an agreement between a lender and a buyer detailing the agreed-upon terms of a loan, including the number of funds they’re set to receive and the type of loan being granted. It’s also called an approval letter, and it’s official proof you’re going to get a loan.
Generally, the lender issues a mortgage commitment letter after approving your home application. There are two types of commitment letters – conditional and final. Conditional commitment letters come with a list of requirements you must meet before being approved for a certain loan amount. Some of these conditions include:
• Documenting your down payment source
• Paying off an outstanding collection
• Explaining certain financial deposits, transfers, or withdrawals
• Providing updated asset or income documents
• Completing a wall or septic inspection
These conditions might be “prior to doc,” meaning you can’t get your loan documents until you provide the items and an underwriter signs them off. On the other hand, final commitment letters show you’ve met the conditions, and your lender promises to lend you the specified amount. Unfortunately, final commitment letters have end dates. Therefore, if your loan isn’t funded within the specified period, the offer expires, and you’re forced to reapply for the loan.
Regardless of the type of commitment letter, you need an expert like us to help guide you through the process for a fast close. With over thirty years of experience in mortgage, we understand the ins and outs of mortgage commitment letters and can ensure you get a commitment letter first before finding your new property.
How to get a mortgage commitment letter
There are various steps involved in getting a mortgage commitment letter. First, you’ll need to go through the pre-approval process, which may require you to provide pay stubs and bank statements showing you have a steady income.
The lender also reviews your credit history and credit score to get an idea of how much you owe and how you handle it. This way, they can determine how much more debt you can take on. Once you’re approved, you get your mortgage commitment letter.
Mortgage commitment letter before appraisal
The appraisal is a significant part of the approval process because it lets the lender know there are no major defects or repairs on the home before committing to lending. Additionally, with an appraisal, the loan underwriter can know whether the appraisal value estimate lines up with the buying price.
Typically, the lender doesn’t issue a mortgage commitment letter before appraisal. However, it’s possible to request conditional approval to show the seller you’re a serious home buyer. For instance, if your lender only provides you with a pre-qualification letter, you can request a “credit only” approval to show you’re qualified to obtain a mortgage. This approval verifies that your lender has reviewed your credit, assets, and income and simply needs a satisfactory appraisal before providing a loan commitment.
You can also request a “credit only” approval letter when delays occur. For example, the appraiser may need to revise the report, or the lender can be too busy to get the loan filed through underwriting on time, causing delays.