One commitment that everyone looks for is the mortgage commitment ;) Don’t get this confused with the three tiny words people love to hear when obtaining a mortgage for their new home: Clear to Close. A mortgage loan commitment is the lender's firm approval on the loan. The lender will send a mortgage loan commitment letter that includes any terms or conditions the final approval is subject to.
Once your offer is accepted your mortgage contingency date will be set. You and the sellers will agree to the “First Commitment Date” which is a firm written mortgage commitment from your lender. Your lender will need to send you the commitment letter by that date or they will need to request an extension. If the lender doesn’t meet the date, they will need to notify the buyer's attorney, agent and/or buyer in writing. If a mortgage commitment hasn’t been obtained by the contingency date, the seller has the right to either extend the contract closing date or cancel the contract and return all earnest money to the buyer.
NewCastle Home Loans commitment letter will have certain dates. The date of when the commitment was created, the expiration date, and the first payment date. The average time it takes a lender to close on mortgage is 53 days. At NewCastle, it takes us less than 30. In fact, we have been getting files Clear to Close in under 15 days!
Let’s take a look at the details of the two sections of the mortgage commitment.
First Section of the mortgage commitment:
Terms of the loan Commitment Date: The date that your loan is approved!
Expiration Date: The date the commitment has expired.
First Payment Date: The date you will be making your first payment to your lender.
Our commitment letter will state the loan terms for your mortgage as well.
Loan Purpose: Purchase or refinance.
Loan Amount: This will be an even number.
Loan Type: Fixed or Arm.
Loan Term: This is shown in months (360 = 30 Years) (300 = 25 years) (240 = 20 Years) (180 = 15 years) (120 = 10 years).
Second section of the mortgage commitment: Conditions of the loan
Throughout the loan process, we will strongly urge you to not change anything such as your employment, credit, or financial situation until after your loan funds. NewCastle will also state on the commitment along with verbiage explaining that this mortgage commitment can be modified if anything changes.
Our underwriter will assign conditions to all parties involved as they see fit. The conditions will need to be met by all parties they are assigned to. Most conditions will be assigned to the lender, and some might be to the borrower. The underwriter might request additional documentation once the document request has been sent to the underwriter. Once the underwriter reviews the document she/he will deem the document accepted or rejected form of document.
NewCastle must list all conditions on the mortgage commitment letter. The easy to view letter breaks the conditions up in segments in numerical order.
- At least 3-days before closing (Conditions will be here)
- Within 10- Business days before Closing (Conditions will be here)
- Before Closing (Conditions will be here)
- Before or at Closing (Conditions will be here)
There is a lot of excitement surrounding the mortgage commitment, and it is a great honor to provide our clients with our service.