Tuesday, September 14, 2021 / by Karri Bedor
What is a Loan Commitment
In the Offer to Purchase, there is a “Financing Commitment Contingency” that has a timeline based on the number of days from the offer date to the closing date. Typically, the loan commitment is due approximately 5 days before closing and comes after the appraisal.
So what exactly is a loan commitment?
A loan commitment is a lender's promise to offer a loan or credit of a specified amount to a borrower. Also called a commitment letter, it includes all of the terms and conditions of the loan. www.bankrate.com
Your loan goes through a process called underwriting.
An underwriter will approve or reject your mortgage loan application based on your credit history, employment history, assets, debts, and other factors. It's all about whether that underwriter feels you can repay the loan that you want… But a seasoned loan originator is an integral part of the whole process. mymortgageinsider.com
The terms of your loan are clearly stated in the Financing Commitment Contingency section of the Offer to Purchase. The lender provides a loan commitment for a loan based on the terms of the offer subject to underwriting and the appraisal of the property. Once this process is complete and everything looks good, the buyer directs, in writing, the delivery of the loan commitment to the seller. The buyer has then satisfied the financing contingency.