If you have satisfied a lender's underwriting requirements, you should receive a loan commitment letter. You may use a loan commitment letter from a licensed mortgage lender to validate your ability to buy a home. You can apply for a home loan from various banks, mortgage companies and credit unions, and loan approval guidelines and terms may vary among these mortgage lenders.
A lender's written acceptance for a borrower's loan request is expressed in a loan commitment letter. Real estate agents or home sellers who have a property listed for sale may ask for some form of reassurance that proves a buyer's qualification before removing the listing from the open market. A pre-approval letter or a loan commitment letter reflects a lender's willingness to issue financing based on the documented terms.
A lender will include the agreed upon provisions in a loan commitment letter, such as the mortgage loan amount, the interest rate and the loan terms. A loan commitment letter may indicate a conditional loan commitment or final loan commitment. A loan commitment that requires additional information from the borrower, such as proof of down payment funds, may be issued as conditional. A borrower who has satisfied the lending requirements should receive a final commitment letter. You must sign, date and return the loan commitment to your lender, if you agree to the terms.
A home buyer will need to apply for financing and prove his ability to afford the requested loan amount. After completing a loan application, your lender will review your credit and earnings. You'll need to supply copies of your bank statements, tax returns, pay stubs, W-2 forms, as well as a copy of the purchase contract.
A loan commitment letter generally reflects a valid time frame, such as 60 or 90 days from the date shown on the commitment letter. If your loan commitment period expires, your lender will review your qualifications to determine whether the prior commitment may be extended or if the original commitment requires modification. The issuance of a loan commitment letter from your lender can provide you with confidence as you approach the closing of escrow.