Buyers: Pay Attention to those Mortgage Commitment Conditions
I received a call the other day from an agent in my area with a legal question. So, I put my attorney hat on. It seems her buyers had been under agreement and they received their mortgage commitment letter by the required contingency date. So far so good. The problem was that the lender ended up denying their loan. She wanted to know what recourse they had since the Seller was keeping the deposit. Unfortunately, probably not much (depending on the terms of the contract.) I wondered why they didn't already have an attorney prior to signing the Purchase & Sale agreement - but that's another blog topic!
The reason that this could happen is that a mortgage commitment letter is issued subject to a number of conditions - some of which are small & easy to meet and others which can be problematic. I've seen commitment letters come in subject to appraisal! (Not from my preferred lenders, of course!) That is not a commitment letter in my book!
As a buyer agent in Canton MA, I ask my clients to send me their commitment letter so that I can review the conditions and determine if the conditions are problematic. I review them with my buyers so we can make a decision about whether the commitment is truly a commitment or if we need more time on that contingency date.
Once the contingency date has passed, the buyer usually has no recourse to get out of the contract and retain his or her deposit due to lack of financing so determining the quality of the mortgage commitment letter is very important.
This is one more instance of what services and potential cost savings a buyer agent can provide.
If you are interested in buying a house in the Canton MA area, contact a buyer agent who will protect your interests every step of the way - your Canton MA Buyer Agent.
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Christine Smith is an Attorney and Exclusive Buyer Agent with over 25 years of experience in the real estate field.
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