Obtain Mortgage Commitment Letter
Be Aware of Your Finance Date
According to your Mortgage Contingency Clause in your Purchase and Sale Agreement, you have a date by which you need to obtain a Commitment Letter from your lender. If that date lapses without receiving a commitment letter, you put yourself at risk of losing all of the money you put down at the time of the Offer and the P&S. You may receive a commitment letter with conditions listed that still need to be fulfilled. In that case, you need to supply your loan officer with the necessary documentation to satisfy the underwriter and get a clean commitment. If you are in this situation and approaching the finance date in your mortgage contingency clause, have your attorney negotiate an extension of the finance date with the seller’s attorney. This is not an uncommon occurrence in home purchases, but it should not be overlooked.
Prior to receiving your commitment letter, the underwriter is going to order an appraisal to be conducted by an independent company. The appraisal must come in equal to or greater than your purchase price. If it does, and you have met all other conditions of the loan, you will receive your commitment letter from your loan officer. If the appraisal comes in below the purchase price, you can try to renegotiate the purchase price with the seller, but if they are not willing to bring the price down, you will have to pay the difference between the appraisal and the purchase price in order for the lender to approve the loan. In this case, you also have the option to back out of the deal and get your deposit money back as long as your mortgage contingency hasn’t expired. To better understand the appraisal process, click here.