George is explaining step by step what needs to happen before a mortgage loan can close. Meeting the possible conditions, and there often are at least a few, is vital to getting the loan closed and keys handed over to the new homeowners.
Once the Commitment Letter has be issued, everyone is a little more at ease, but this is not a time to relax, all the conditions that are on the Commitment Letter have to be completed before the Closing can occur. Even though the Closing Department will be the main contact from this point on, I still remain as available to the Borrower as I have been up to this point. The Closing Department maybe the proper contact during the period of Meeting Conditions On The Commitment Letter, but I am the one that the Borrower is familiar with, and I am the one that they feel comfortable contacting with questions.
Borrowers many times think that they have more time than they really do for Meeting Conditions On The Commitment Letter so I stay on top of them to make sure that it is getting done. I also need to stay in contact with the Closing Department during this time to make sure that conditions are being cleared as the Borrower is submitting them.
At McCue Mortgage we try to not issue a Commitment Letter until everything possible has been done up to that point. A Commitment Letter with several conditions that should have been done already does not do anyone much good, and only increases the stress level for everyone involved. However, there are conditions that can not be satisfied until a Loan Commitment is issued. For example:
The Borrower - Now needs to:
- Get Homeowner Insurance - If the Borrower has not already shopped around for Homeowner Insurance, they need to do that now, and an Insurance Binder sent to the Closing Department. The Insurance Company will also require the Buyer to pay the first years premium since there isn't any money in the Buyers Escrow Account to pay for it at this point. The following year the Homeowners Insurance will be paid out of the Escrow Account, because the Buyer will have been paying one month of the insurance premium every month with their monthly payment.
- Gift Funds - Most of the time a parent or whoever is providing Gift Funds does not want to give them to the Borrower until the Mortgage has been approved. So now that the loan has be approved, the Gift Letter, funds, and proper documentation has to be provided to the Closing Department and signed off by the Underwriter. The documentation that is generally needed is:
- Completed, signed Gift Letter For
- Copy of the Gift Check
- Bank Statement from the Buyer showing the money being deposited
- And for FHA Loans, a copy of the Donner's Bank Statement showing the funds being withdrawn.
- Repairs - If there were repairs, they have to ALL be completed, and the Appraiser sent back to the property to verify that they were done. Even though repairs should really be made by the Seller, many times the Seller refuses to make them, and if the Borrower wants to Close, they end up making them. But if the Borrower is going to make the repairs they don't want to do them until the loan is approved, so this means that they have to get this done as quickly as possible, so that the Appraiser can verify that it has been done.
- The Attorney - Connecticut is an Attorney State, which means that the Attorney will prepare all of the documents for the Closing as well as do the Closing. The Attorney will immediately begin to work on:
- The Title Search - This needed to be done in order to make sure that there are no Liens against the property, and the boundary lines of the property are verified.
- Title Policy - A Basic Title Policy is required by all Banks/Lenders in Connecticut. The Basic Title Policy will among other things protect the Buyer against liens on the property. Most of the Attorneys will also suggest that the Buyer pay for an Owners Extended Title Policy which will further protect them against boundary line disputes.
- Closing Documents - The Attorney will also prepare all of the other documents that are needed for the Closing such as the:
- Mortgage and
Once the Attorney and Buyer have finished Meeting Conditions On The Commitment Letter, the Closing Department will give the Attorney a "Clear To Close". These are the words that everyone has been waiting to hear during this whole process, and now the Closing can take place on the date that has been agreed by all parties. Unfortunately people do some times lose their job during this process, so the Underwriter will also verify employment again before the loan Closes.
Meeting Conditions On the Letter may sound easy, but I assure you it is a time that is filled with questions, which means that I have to be ready to be the go between, and make sure that my Borrower understands what they need to do. Even the simplest of things, can be confusing, so just being available to answer questions can make things go a lot more smoothly.
We are now set for the "The Big Day", the day that everyone has been waiting for, "The Cosing" and I will cover that in my next blog.
Other Blogs In This Series:
Who To Call For Your Mortgage Needs In Connecticut:
George Souto NMLS# 65149 is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 firstname.lastname@example.org, or visit my McCue Mortgage Homepage.