Meeting Conditions On The Commitment Letter

By
Mortgage and Lending with George Souto NMLS #65149 FHA, CHFA, VA Mortgages Connecticut NMLS #65149

Once the Commitment Letter has be issued, everyone is a little more at ease, but this is not a time to relax, all the conditions that are on the Commitment Letter have to be completed before the Closing can occur.  Even though the Closing Department will be the main contact from this point on, I still remain as available to the Borrower as I have been up to this point.  The Closing Department maybe the proper contact during the period of Meeting Conditions On The Commitment Letter, but I am the one that the Borrower is familiar with, and I am the one that they feel comfortable contacting with questions.

Borrowers many times think that they have more time than they really do for Meeting Conditions On The Commitment Letter so I stay on top of them to make sure that it is getting done.  I also need to stay in contact with the Closing Department during this time to make sure that conditions are being cleared as the Borrower is submitting them. 

At McCue Mortgage we try to not issue a Commitment Letter until everything possible has been done up to that point.  A Commitment Letter with several conditions that should have been done already does not do anyone much good, and only increases the stress level for everyone involved.  However, there are conditions that can not be satisfied until a Loan Commitment is issued.  For example:

The Borrower -  Now needs to:

  • Get Homeowner Insurance - If the Borrower has not already shopped around for Homeowner Insurance, they need to do that now, and an Insurance Binder sent to the Closing Department.  The Insurance Company will also require the Buyer to pay the first years premium since there isn't any money in the Buyers Escrow Account to pay for it at this point.  The following year the Homeowners Insurance will be paid out of the Escrow Account, because the Buyer will have been paying one month of the insurance premium every month with their monthly payment.
  • Gift Funds - Most of the time a parent or whoever is providing Gift Funds does not want to give them to the Borrower until the Mortgage has been approved.  So now that the loan has be approved, the Gift Letter, funds, and proper documentation has to be provided to the Closing Department and signed off by the Underwriter. The documentation that is generally needed is:
    • Completed, signed Gift Letter For
    • Copy of the Gift Check
    • Bank Statement from the Buyer showing the money being deposited
    • And for FHA Loans, a copy of the Donner's Bank Statement showing the funds being withdrawn.
  • Repairs - If there were repairs, they have to ALL be completed, and the Appraiser sent back to the property to verify that they were done. Even though repairs should really be made by the Seller, many times the Seller refuses to make them, and if the Borrower wants to Close, they end up making them.  But if the Borrower is going to make the repairs they don't want to do them until the loan is approved, so this means that they have to get this done as quickly as possible, so that the Appraiser can verify that it has been done.
  • The Attorney - Connecticut is an Attorney State, which means that the Attorney will prepare all of the documents for the Closing as well as do the Closing.  The Attorney will immediately begin to work on:
    • The Title Search - This needed to be done in order to make sure that there are no Liens against the property, and the boundary lines of the property are verified. 
    • Title Policy - A Basic Title Policy is required by all Banks/Lenders in Connecticut.  The Basic Title Policy will among other things protect the Buyer against liens on the property.  Most of the Attorneys will also suggest that the Buyer pay for an Owners Extended Title Policy which will further protect them against boundary line disputes. 
    • Closing Documents - The Attorney will also prepare all of the other documents that are needed for the Closing such as the: 
      • Mortgage and
      • Deed

Once the Attorney and Buyer have finished Meeting Conditions On The Commitment Letter, the Closing Department will give the Attorney a "Clear To Close". These are the words that everyone has been waiting to hear during this whole process, and now the Closing can take place on the date that has been agreed by all parties.  Unfortunately people do some times lose their job during this process, so the Underwriter will also verify employment again before the loan Closes.

Meeting Conditions On the Letter may sound easy, but I assure you it is a time that is filled with questions, which means that I have to be ready to be the go between, and make sure that my Borrower understands what they need to do.  Even the simplest of things, can be confusing, so just being available to answer questions can make things go a lot more smoothly.

We are now set for the "The Big Day", the day that everyone has been waiting for, "The Cosing" and I will cover that in my next blog. 

 

Other Blogs In This Series:

Prepare A Buyer To Purchase A Home

Obtaining A Mortgage

The Closing

The Post Closing Years

 

*************************************************************************************

Who To Call For Your Mortgage Needs In Connecticut:

George Souto NMLS# 65149 is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308  gsouto@mccuemortgage.com, or visit my McCue Mortgage Homepage.

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Esko Kiuru 07/31/2012 07:28 PM
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Show All Comments
Ambassador
1,846,963
Jeff Dowler CRS
Solutions Real Estate - Carlsbad, CA
Carlsbad CA Homes for Sale (760) 840-1360

George

This is a very useful resource on commitment letters. I think buyers are often confused because they are told there is a commitment/approval but then find out there are other conditions to be met.

I am working with a bank now that does not even do a conditional approval - a new one for me so clearly practices vary quite a bit

A good read for all buyers, and their agents.

Jeff

Jul 30, 2012 03:56 PM #1
Rainmaker
810,806
Gail Robinson
William Raveis Real Estate - Southport, CT
CRS, GRI, e-PRO Fairfield County, CT

George, Thia ia interesting, because I tell my Sellers to wait until they get the Mortgage Commitment letter before making expensive repairs required for closing.  No point having the work done, if the buyer cannot get the mortgage due to low appraisal or some other issue.

Jul 30, 2012 04:37 PM #2
Ambassador
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Brenda Mullen
RE/MAX Access - Schertz, TX
Your San Antonio TX Real Estate Agent!!

This is some more in depth and terrific information about the entire loan process.  I am learning a bunch from this series George and any buyer looking to learn about what is involved in getting a mortgage should read this :)!

Jul 30, 2012 05:59 PM #3
Rainmaker
1,067,744
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

 

 George -- I like to work with lender like YOU! "At McCue Mortgage we try to not issue a Commitment Letter until everything possible has been done up to that point.  A Commitment Letter with several conditions that should have been done already does not do anyone much good, and only increases the stress level for everyone involved."  It really does no one no good if there are lots of conditions left!  I got a commitment letter once with over 42 conditions.. Now what kind of commitment was that.  I just had a big hassle with a lender that would not attempt to get as many conditions satisfied as possible prior to the commitment date. In NH and other states, if a condition cannot be met after the commitment date passes, the buyer could lose their deposit. 


Jul 30, 2012 06:15 PM #4
Ambassador
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Praful Thakkar
Keller Williams Realty - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

George, you are right - we can not relax after the commitment letter is issued. I do send my sellers (and buyers) 10-day before document and make sure we are on right track for closing.

About clearing conditions, if doable, they are taken care of in advance - and yes, it does help.

Jul 30, 2012 09:34 PM #5
Rainmaker
562,075
Wayne Johnson
Coldwell Banker D'Ann Harper REALTORS® - San Antonio, TX
San Antonio REALTOR, San Antonio Homes For Sale

George-Time does seem to fly by during the last days before closing. And sometimes lately, I've noticed new requirements are being added that are not mentioned in the Commitment letter. I get it that Lender's don't want to be forced to buy back loans but it would be nice if everything required of the borrower was listed one time. Your description is very helpful.

Jul 30, 2012 09:57 PM #6
Rainmaker
1,088,305
Ginny Gorman
Phillips Post Road Realty ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in North Kingstown RI and beyond

George, i was just going to suggest this great post on Commitment letter & what it all means...so buyers do not understand no matter how hard you explain it that all criteria must be met timely!  This is a great blog post...very informative for buyers....congrats!

Jul 31, 2012 03:44 AM #7
Rainmaker
1,631,804
Debbie Gartner
Floor Coverings International Westchester NY & Stamford CT - White Plains, NY
The Flooring Girl - Westchester hardwood flooring

George - What a great outline.  I was so lucky when I was buying my house as my dad was my attorney, so I knew I could trust him.  NY is an atty state too and thankfully he had a lot of experience here...and apparently a lot of people knew him, so I got a lot of last minute discounts.

Jul 31, 2012 03:54 AM #8
Rainmaker
940,477
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

A commitment letter is something totally different today, than it was a few years ago. Even when all of the conditions of the commitment letter have been met, there can still be issue that show up.

Jul 31, 2012 05:01 AM #9
Rainmaker
893,958
Michael Setunsky
Michael's Commercial LLC - Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

George, I've been waiting for "The Big Day" now for eleven days waiting for the purchaser to take care of last minute issues.

Jul 31, 2012 05:25 AM #10
Rainmaker
1,229,941
Al & Peggy Cunningham Brokers, Brampton Ontario Homes For Sale 905-450-5500
RE/MAX Realty Services Inc. - Brampton, ON

Awww, late to the party George. This is such excellent advice. We can't tell you the duress not complying with these details causes. Well you know, don't you. George you are very much a 'hands on guy' that looks after his clients. A friend people need at a time like this. 

Jul 31, 2012 05:38 AM #11
Rainer
71,997
Tamara Elliott-Deering
Central Metro Realty - Cedar Creek, TX

George,

I just got off the phone with my Title Company Closer and my Realtor (I'm selling a property in this transaction) and my exact words were "the worst part of the real estate process is from the time the deal goes to the underwriter to closing" I feel like at this point the deal goes into some black hole where I have no idea what's going on and "there be dragons" some of them I know to worry about like the appraisal but everything else comes from left field.  The lasted being a minor issue with the survey, the lender has had the survey for over a week and less than 24 hours before closing wanted some old boundary lines removed and the legal description changed so we won't close on time.  I wish that there were more lenders like you who actually could explain what was going on in the process.

Jul 31, 2012 07:26 AM #12
Rainmaker
313,710
Sandy Acevedo
951-290-8588 - Chino Hills, CA
RE/MAX Masters, Inland Empire Homes for Sale

Hi George, great post. Not only does it provide good information for your clients, but it also lets us, on the other coast, know how diffenerently your job is done from us.

Jul 31, 2012 08:27 AM #13
Rainmaker
507,702
Chris and Dick Dovorany
Homes for Sale in Naples, Bonita Springs and Estero, Florida - Naples, FL
Broker/Associate at Premiere Plus Realty

Very good points.  Don't rely on others to make sure you will be closing. 

Jul 31, 2012 08:41 AM #14
Rainmaker
1,019,967
Nick T Pappas
Assoc. Broker/Broker ABR, SFR, e-Pro, @Homes Realty Group, Huntsville AL - Huntsville, AL
Madison & Huntsville Alabama Real Estate Resource

George, most buyers don't know what to expect when purchasing a home.  Showing them the process helps to releive their stress and feeling a little lost...another great job.

Jul 31, 2012 11:16 AM #15
Rainmaker
325,145
Esko Kiuru
Bethesda, MD

George,

Friendly phone calls to the borrowers about meeting conditions promptly will usually result in a closing on time. That's what everyone wants.

Jul 31, 2012 07:22 PM #16
Rainmaker
977,580
Sharon Alters
Coldwell Banker Vanguard Realty - Fleming Island, FL
Your Fleming Island Relocation Agents.

George, a loan commitment does have some things that still need to be done. We are not an attorney state, but our borrowers have similar conditions to meet.

Sharon

Jul 31, 2012 09:16 PM #17
Ambassador
981,307
Kristin Hamilton
Keller Williams Realty - Redlands, CA
(909) 557-6966, CDPE, SFR, CHS-Redlands/Loma Linda

Hi George,

I can tell from your complete post that you are an excellent mortgage officer and do a great job for your clients. It is so important to get a good loan with good rates and not end up with surprises. Our country is still trying to recover from foreclosures due to many issues in the past. Staying on top of your clients needs  and walking them through the entire process by doing your best makes you one the the tops in the nation. A good job well done to the buyers mean more client referrals as well. Happy Saturday.

Aug 04, 2012 08:19 AM #18
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Ambassador
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George Souto

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