Definition of Loan Commitment Letter:

Loan Commitment Letter Orange County:

A loan commitment letter is issued after the loan applicant has been preapproved by the mortgage company or lender (this would be after the applicant had completed a full application or 1003). This means that an underwriter has reviewed the application and most likely has been run through one of the Government Sponsored Enterprises (GSE’s) Fannie Mae or Freddie Mac’s automated underwriting system, and has received a conditional approval from them as well. This letter which is addressed to the potential borrower will include all of the conditions to the loan approval. The lender is committing to lend to the borrower per the terms stated in the commitment letter. A loan commitment letter may take a longer to prepare as it requires an underwriter to review the application and supporting documentation.

Here are some of the normal items that would be requested from the loan applicant in a conditional approval:

  • Last 2 years tax returns (and a year to date P&L statement if self employed)

  • Last 2 year W-2 forms along with 2 recent paystubs

  • A letter of explanation for any derogatory or negative credit

  • Rental Agreements (if they own rental property)

In a conditional approval, it is always subject to:

  • Satisfactory appraisal

  • Clear title report.


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