What is a lock commitment letter?
The lock commitment letter is a letter provided by the lender to the borrower that the rate and terms of the loan have been locked. In the case you are dealing with a mortgage broker, be advised and demand to see the lock commitment letter. Some brokers wouldn’t lock and allow the rate to float. When purchasing a house, borrowers have to take a mortgage loan – very few can afford to pay cash. When shopping for a loan and looking for a house, prequalification and preapproval are important steps of the process. At the prequalification stage, you talk over the phone with a home loan specialist and find out how much you can borrow. At the preapproval stage, the lender will issue a lock commitment letter that you can bring to the seller to show you have already obtained financing. A seller would much rather prefer to deal with borrowers who show proof that they already obtained financing rather than with borrowers who are still looking for a loan. The lock commitment letter binds the lender
Related Questions
- Commitment letter issued on request. If a lender issues a commitment letter only at the applicants request, does the lender have a preapproval program?
- For the Letter of Commitment signature page, can the signature be an electronic signature or does it need to be ink signature?
- What is a lock commitment letter?
