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Mortgage Loan Commitment?!?

Valued Contributor

Mortgage Loan Commitment?!?

I received a pre-approval from my broker...then the loan processor from his company sent me a Mortgage Loan Commitment and asked me to sign it.  What exactly does this mean?!?! They are commited to finding me a loan or I am commited to allowing them to find a lender?? I guess I am confused about what pre-approval really is....since I am working with a broker, what if I can't make a deal with the builder? No commitment right??


Starting Score: May 2013 EQ: 577 TU: 537 EX: 555
Current Score: EQ: 634 TU: 617 EX: 639
Goal Score: ALL 720+

In the Garden Until August 2018 Last App June 2016
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9 REPLIES
Super Contributor

Re: Mortgage Loan Commitment?!?

It could mean different things.  If it's from a lender then it could mean they are committing to give you a loan as long as you provide them the documentation they ask for, or it may mean that all paperwork they need has been received & reviewed and they are ready to fund the loan.  If it's from a mortgage broker then it usually just means they are committed to finding you a loan.  The term can be a bit misleading, so I'd definitely ask for clarification on what that document means to them.

Mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime) since 2002, based in Irvine, CA and lending in all 50 states

Information that is needed to determine if you qualify for a mortgage

Established Contributor

Re: Mortgage Loan Commitment?!?

Mortgage commitment these days doesnt seem to mean much.
Senior Contributor

Re: Mortgage Loan Commitment?!?

A true loan commitment is a document from a LENDER, not a broker, that commits to fund the loan and some conditions are usually listed. If that's not what your broker gave to youm then you do not have a MORTGAGE LOAN FUNDING COMMITMENT.

Valued Contributor

Re: Mortgage Loan Commitment?!?

Thanks guys. It says mortgage loan commitment and lists all of the conditions that need to be met; some are mine, some the lender, some the broker.....but, I haven't made an offer to the builder yet. So, I guess they are commiting to finding funding for my loan IF the builder and I come to an agreement? 


Starting Score: May 2013 EQ: 577 TU: 537 EX: 555
Current Score: EQ: 634 TU: 617 EX: 639
Goal Score: ALL 720+

In the Garden Until August 2018 Last App June 2016
border="0"Take the myFICO Fitness Challenge
Super Contributor

Re: Mortgage Loan Commitment?!?


newmomnewme wrote:

So, I guess they are commiting to finding funding for my loan IF the builder and I come to an agreement? 


Correct.

Mortgages (FHA, VA, USDA, Fannie, Freddie, Non-Prime) since 2002, based in Irvine, CA and lending in all 50 states

Information that is needed to determine if you qualify for a mortgage

Senior Contributor

Re: Mortgage Loan Commitment?!?


newmomnewme wrote:

Thanks guys. It says mortgage loan commitment and lists all of the conditions that need to be met; some are mine, some the lender, some the broker.....but, I haven't made an offer to the builder yet. So, I guess they are commiting to finding funding for my loan IF the builder and I come to an agreement? 


Also, I have never seen a lender commit to fund a mortgage without knowing the specific property upfront. Anything short of a true commitment to fund the loan is a pre-approval, pre-qual, etc.

Another way to think about the value of the document you have is whether or not you had submitted all of your financial documents to the underwriter. If you did not, you've got a preapproval that they are calling by some other name.

Moderator

Re: Mortgage Loan Commitment?!?

^^^ True.  And if you didn't have a specific property on which you submitted your application, I bet your conditions include some very broad things like: Suject to satisfactory appraisal. Read your "Loan Commitment" and check for overly broad statements.

 

It is good you have gone all the way through u/w so now the next time you have to go through u/w with the specific property it ought to be easier for you. Especially if it is a new build.

Senior Contributor

Re: Mortgage Loan Commitment?!?

I sell new contrustion for a national builder. Once my assigned loan officer issues a pre-qual, I'm writing a purchase agreement. There is verbiage in the agreement that required the buyer to act in good faith and to submit all required documentation promptly, etc etc. The status of each buyers mortgage app is checked three times per week. If it looks questionable at any point, the process is suspended before we spend money to engineer the home. There really isn't much risk for us because sometimes we may want a few inventory homes so we use the buyer's deal to justify getting them started.

 

If buying a resale, that is a whole other ballgame.

Valued Contributor

Re: Mortgage Loan Commitment?!?

Ok, now I understand. I haven't COMMITED to anything yet....its with a brokerage, so they commited to find me funding. Got it. 

 

Thankfully I joined this forum! Sad news though, I spoke with the realtor and builders agent via telephone yesterday and I was not pleased with their presentation.....they weren't prepared and couldn't answer questions about modifications to the floorplans (I want a jack n jill bathroom for son's room and play room)...they pushed back about a basement, and tried to push me to look at a ranch (i have told them over and over that i was not interested in a ranch).  Was that just the first contact/try to sell what they have conversation?!?!

 

I got off the phone disappointed...AND the homes are 30k more than they were 6 months ago. I guess I am going to have to get tough with them next week and if they can't give me what I want for what I can afford, I move on. That is that.  I just didn't want to continue to rent......and the location is absolutely perfect for me and my son.  Smiley Sad


Starting Score: May 2013 EQ: 577 TU: 537 EX: 555
Current Score: EQ: 634 TU: 617 EX: 639
Goal Score: ALL 720+

In the Garden Until August 2018 Last App June 2016
border="0"Take the myFICO Fitness Challenge