Home Buying in Hopatcong>Question Details

Leonor Troya…, Home Buyer in New Jersey

What is considered a valid mortgage commitment in New Jersey? Does the commitment have to specify the amount?

Asked by Leonor Troyano, New Jersey Wed Jun 4, 2008

of the mortgage to be valid?

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9
Deborah Madey’s answer
Hi Sandy,

I have never seen a mortgage commitment not include the purchase price and loan amount. The commitment will also detail any and all contingencies which have not yet been met.

Deborah
1 vote Thank Flag Link Thu Jun 5, 2008
Deborah Madey, Real Estate Pro in Brick, NJ
MVP'08
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The seller will want to see confirmation from the bank will come through on the loan for the paricular % of the purchase price. The firm commitment will come through after the bank completes the reivew of the borrower and the appraisal to confirm value of the property.

Best,
Jeanne Feenick
Unwavering Commitment to Service, Unsurpassed Results
Web Reference: http://www.FeenickHomes.com
0 votes Thank Flag Link Thu Dec 6, 2012
Apologies...in my reply below I meant predicated...not appreciated.
Flag Thu Dec 6, 2012
Not trying to create an argument but, I'm not sure of the difference of a commitment over a firm commitment. NJ law specifically dictates that the commitment is not valid if it's appreciated on appraisal or credit issues. The grey area to me is the pre-approval because this is a credit and income approval. My guess is that it should not be viewed by anyone as a valid commitment

The reason for my angst is a NJ realtor is arguing with me that this is not so, and that I should stick to NY business. She is dead wrong. If fact NJ's governor was questioned on this fact, and he is wrong as well.
Flag Thu Dec 6, 2012
http://www.state.nj.us/dobi/bulletins/blt07_12.pdf


Please read here. A mortgage commitment in the state of New Jersey cannot be conditioned on appraisal or credit
0 votes Thank Flag Link Wed Dec 5, 2012
Sandy:

A loan commitment letter is usually issued once your lender verifies your information and financial statements.
It is issued after you have signed a contract to purchase a property, and is usually contingent on the property appraising for at least the purchase price. A loan commitment ALWAYS specifies the loan amount, terms interest rate, type of loan, and if an adjustable, what your payments will be until the interest rate changes, and the index and margin above that the change will be based on.

A loan Pre-approval does not require you be " under contract", and usually states an approx amount of loan you should qualify for, based upon your credit, income and expenses. These are usually submitted with your offer to purchase, to demonstrate to the seller that you are serious and qualified.
Web Reference: http://www.njlakehouse.com
0 votes Thank Flag Link Wed Nov 23, 2011
All mortgage commitments will list the price of the purchase price and loan amount, as well as the type of financing. Keep in mind there will usually be some conditions which will need to be satisfied before closing, such as proof of insurance, etc.
0 votes Thank Flag Link Sat Nov 21, 2009
In New Jersey, unlike most states, if a mortgage commitment has contingincies that are beyond a borrower's sole control (for example, that they sell their own home before they close on the home they are buying), than the mortgage commitment is considered "not firm" and either party may cancel the contract under its mortgage commitment clause. (This is something that most real estate brokers and even most real estate lawyers don't know.)
0 votes Thank Flag Link Mon Jun 9, 2008
Hi Sandy, when you make your offer, the seller will look for a mortgage preapproval from a recognized and respected mortgage provider for comfort that you have been preapproved to borrow the amount of the offer you plan to finance. In the Mortgage Contingency section of the contract, you specify a date by which you will provide the actual mortgage commitment which comes after the bank has completed their complete review of your application and all supporting documentation as well as the appraisal of the property. The Mortgage Commitment is, as Corey states, the bank's promise to lend you the money.

I hope that helps. If I can be of further service, please do not hesitate to reach out to me. You can also find me at http://www.feenick.com

Best,
Jeannie Feenick
Weichert Realtors
908-337-0943
http://www.feenick.com
Web Reference: http://www.feenick.com
0 votes Thank Flag Link Thu Jun 5, 2008
Sandy,
There are conditional commitments where the lender has placed a number of contingencies such as satisfactory appraisal, proof of continued employment, proof of cancalled debts judgements...but I have never seen one that was missing an amount. (This is the most important information)
0 votes Thank Flag Link Thu Jun 5, 2008
Dear Sandy the commitment is the promise from the bank to lend you the amount of money you need for a purchase based on the property and you meeting some requirements. (i.e. income, savings, employment verification,....) The commitment will definately have the amount of money you have qualified for and should be several pages. Please let me know if you have any further questions.
0 votes Thank Flag Link Wed Jun 4, 2008
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