This review list is being supplied to you in order to inform you about the document in question and to assist you in preparing it for submission. This is a common mortgage commitment letter that can be used by any lending group or institution, whether private or public in nature. It details the terms and conditions of the loan that has been agreed upon so that a closing on the property in issue may be set up and negotiated between the various parties involved in the transaction.
- Make numerous copies of the document. One should be kept with the transaction file. Give one to each of the parties involved.
Mortgage Commitment Letter
Mortgage Commitment Letter
Effective: __________________ Expires: _____________________
Amount: $ _______________
_______________________________________________, described herein as LENDER, agrees that it will lend the sum of $__________ to _____________________, described herein as BORROWER, subject to the following terms and conditions:
1. Delivery of marketable title and title insurance. ________________ prior to closing shall deliver a mortgagee title insurance binder from a licensed title insurer, acceptable to LENDER, which will provide for the issuance at closing of a policy providing that the title is marketable, and free of all liens or charges other than current taxes and:
_______________________________________________________________Borrower shall provide a current survey by a licensed surveyor showing no encroachments or defects.
A current building inspection report from a building inspector acceptable to LENDER showing no major structural defects. For purposes of this section, major shall be defined as requiring repair and being more than 3% of the purchase price.
This condition may be waived upon escrowing of sufficient funds at closing to be used to correct the described defects, which sums shall then be expended to complete the needed corrections.
That the zoning or other land development restrictions imposed by lawful authority shall permit use of the parcel as __________________________.
Credit life insurance sufficient to make monthly payments during a period of disability. If an amount is specified, credit life insurance is available from LENDER: ___. If no amount is specified credit disability insurance is not available from LENDER. In any event, credit life insurance if available from LENDER is not required to be purchased by BORROWER as condition of obtaining this extension of credit: you may either purchase through an insurance agency of your choice, or assign an existing policy.
Credit disability insurance sufficient to make monthly payments during a period of disability.
If an amount is specified, credit disability insurance is available from LENDER: _____. If no amount is specified credit disability insurance is not available from LENDER. In any event, credit disability insurance if available from LENDER is not required to be purchased by BORROWER as condition of obtaining this extension of credit: you may either purchase through an insurance agency of your choice, or assign an existing policy.
At the time of funding this commitment, the BORROWERS shall have experienced no material adverse change in employment.
That the following individuals execute a guarantee of prompt repayment of the loan in the form customarily used in this area for the same:
__________________________________________________________The furnishing by the borrower of an appraisal from an appraiser acceptable to lender showing a loan to value ratio of at least ____%.
The commitment is further subject to the following additional terms:
Interest Rate (APR): ___
Loan Term: _____________
Points to be paid at closing by BORROWER: ___
If an amount is included below, PMI (Private Mortgage Insurance) is also required:
____________If a date is stated below, the loan will balloon at that time:
_______, and the principal balance at that time will equal $
________.Other fees due at closing:
________________________________________________.
Dated: _____________________________________
________________________________________________________
LENDER
by an authorized officerMortgage Commitment Letter
Review ListThis review list is provided to inform you about this document in question and assist you in its preparation. This is a standard mortgage commitment letter than can be used by any private or public lending group or institution. It specifies the terms and conditions of the agreed upon loan so a closing on the property in question can be set up and arranged between the various parties.
1. Make multiple copies. Keep one with the transaction file. Give one to each related party.
Frequently Asked Questions
What is a mortgage commitment letter?
A mortgage commitment letter is a document in which a lender agrees to lend a specified sum to a borrower, subject to certain terms and conditions. It outlines the amount of the loan and the conditions that must be met before closing. The letter also includes an effective date and an expiration date.
What does a mortgage commitment letter include?
The letter includes the loan amount, the names of the lender and borrower, and a list of terms and conditions. These conditions typically involve the delivery of marketable title, title insurance, a current survey, and a building inspection report. It also specifies the effective and expiration dates of the commitment.
What are the conditions for the lender to lend the money?
The lender requires the delivery of marketable title and title insurance, evidenced by a mortgagee title insurance binder from a licensed title insurer. The borrower must also provide a current survey by a licensed surveyor showing no encroachments or defects. Additionally, a current building inspection report from an acceptable inspector showing no major structural defects is required.
What is considered a major structural defect in the building inspection report?
For the purposes of the commitment letter, a major structural defect is defined as one that requires repair and costs more than 3% of the purchase price. The inspection must be conducted by a building inspector acceptable to the lender. If such defects are found, the condition may be waived upon escrowing sufficient funds at closing to correct them.
Can the building inspection condition be waived?
Yes, the condition regarding major structural defects may be waived if sufficient funds are escrowed at closing to be used to correct the issues. This is stated in the commitment letter. The waiver is subject to the lender's discretion and the escrow of adequate funds.
What is a mortgagee title insurance binder?
A mortgagee title insurance binder is a document from a licensed title insurer that provides for the issuance at closing of a title insurance policy. It ensures that the title is marketable and free of all liens or charges other than current taxes and any exceptions listed in the commitment letter. The binder must be acceptable to the lender.
What does marketable title mean in a mortgage commitment letter?
Marketable title means that the title to the property is free of all liens or charges, except for current taxes and any other exceptions specified in the commitment letter. It must be insurable by a licensed title insurer. The borrower must deliver a mortgagee title insurance binder prior to closing to demonstrate this.
What is the purpose of the survey in the mortgage commitment process?
The survey, prepared by a licensed surveyor, must show no encroachments or defects on the property. It is a condition for the lender's commitment to lend. The survey helps ensure that the property's boundaries and improvements are as expected and that there are no issues that could affect the title.
What happens if the conditions in the mortgage commitment letter are not met?
If the conditions are not met, the lender may not be obligated to lend the money as outlined in the commitment letter. The letter states that the lender agrees to lend subject to the terms and conditions. Therefore, failure to satisfy these conditions could result in the commitment becoming void or the loan not closing.
Does a mortgage commitment letter guarantee final approval of the loan?
No, a mortgage commitment letter is not a guarantee of final approval; it is a conditional agreement to lend. The lender agrees to lend only if all the specified terms and conditions are met. The letter includes an expiration date, after which the commitment may no longer be valid.
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