A mortgage commitment is an important step in the borrowing process. If you’re in the Mortgage Trail web app your commitment will be visible in Stage 5
A mortgage commitment is a document that a Lender issues when they are satisfied that the first part of their due diligence is complete. It details and describes what a funded mortgage will look like – the rate, closing date, payment amount, term and other pertinent information.
The mortgage itself has not been funded (funded means completed). Not yet.
Commitments have Conditions
A commitment typically includes conditions that the customer and mortgage broker need to meet before the Lender will ‘fund’. When the conditions are met, the Lender provides the mortgage and it moves to a stage that involves lawyers. Conditions are important. They need to be met well before the Closing date so the sooner they are fulfilled, the better.
Conditions focus on income, credit, down payment (if applicable), property valuation and the like. The sooner, the better when it comes to wrapping things up.
The time between when a mortgage commitment is issued and when the mortgage funds is sensitive and should be treated as a ‘quiet period’ for purchases and adventures of any kind.
You’re about to buy a property. Now is not the time to jeopardize it.
Things to avoid between commitment and funding:
- Changes to your credit or employment status.
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- a new vehicle
- new credit cards
- a new loan (borrow to fix the kitchen once you actually own the kitchen)
- changing jobs
- big purchases on credit (wait to buy furniture after you own the rooms)
- missing a payment
- co-signing anything
- getting divorced or separated
- commit a crime
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In short, don’t do anything that changes your mortgage loan submission.
If you are unsure what to do in a certain situation, ask us.