Banks Giving Commitments

LoveInTheHouseMay 14, 2011

Assuming everything else is great, will a bank give a commitment to a buyer whose house is under contract if his buyer hasn't gotten his commitment yet? I hope that made sense.

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brickeyee

Generally only if you can show you can maintain both mortgage payments i case the sale falls through.

    Bookmark   May 14, 2011 at 11:23AM
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sylviatexas1

They'll often give conditional commitments, saying, for instance, that the buyer is qualified once his home is sold.

    Bookmark   May 14, 2011 at 11:43AM
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LoveInTheHouse

Okay, so assuming that most people have to sell a house nowadays to buy another one, my buyer won't get a mortgage commitment until HIS buyer gets HIS mortgage commitment and no one will get a mortgage commitment until their houses are sold, meaning after they close?

When my house was sold the last time, an agent advised me not to do the well/septic/termite test, which I was responsible for, until my buyer got her mortgage commitment. Just in case she couldn't get her mortgage, even though she was pre-approved, so I wouldn't be stuck with the costs of those tests which are only good for thirty days. Turns out it was good advice because I kept waiting and waiting for the commitment and the bank kept saying "tomorrow, tomorrow," and before you knew it, we were two days before closing and they declined her.

Now, I've received two offers and we're going to take one of them. My buyer is pre-approved and in contract. He has a buyer who is pre-approved and doesn't have to sell a house to buy his. I don't want to start house shopping again and then the deal falls through so I thought I should wait till there was an actual commitment. What constitues a house being "sold?"

    Bookmark   May 15, 2011 at 12:39AM
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jboling_gw

The experts here can answer you, but I've always considered a house "sold" when closing is finalized, and "pending" when a deal has been struck, a mortgage approved for the buyer, and everyone's waiting for the closing.

    Bookmark   May 15, 2011 at 12:10PM
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pamghatten

Lenders do not approve loans subject to the borrowers buyer getting a commitment, since a commitment is just another piece of paper.

Loans are approved with an at closing condition for the borrower to provide a copy of the HUD-1 from the sale of their present home evidencing $XXXX as proceeds from the sale of that home.

If the borrower cannot satisfy that condition by the time the loan is scheduled to close, then the closing is canceled.

    Bookmark   May 16, 2011 at 12:31PM
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LoveInTheHouse

Mmm, so there's no real commitment, meaning it's not over till it's over. I wonder when I should go house shopping? I guess I'll start another post. Thanks!

    Bookmark   May 17, 2011 at 11:05PM
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brickeyee

"there's no real commitment"

Sort of.

When the lender allows settlement to be scheduled that is often as good as it gets.

They can still refuse to find the loan at just about any point, for any reason they can think of.

In wet states (money changes hand at the closing table) the money being transferred to the closing company is a sort of real commitment. The bank has provided the funds.

In dry closing states it is still subject to review (the bank has one more chance).

    Bookmark   May 18, 2011 at 12:08PM
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