Can My Bank Back Out of a Commitment Letter? - YouTube

hey folks my name is chris at hauseit i'm the co-founder here at house it

based in miami florida today we're going to talk about a topic it is that is on

the minds of many first-time home buyers here in florida and that is can i bank

back out of a commitment letter

well let's first take a step back and examine what a commitment letter really

is so as you've seen in previous videos or have probably heard the whole point

of having a financing contingency in your contract here in florida is to be

able to get a commitment letter from a bank

within x number of days so it's typically 40 45 days it's negotiable

there's a fill in a blank number as well in there that i believe is either 30 or

45 days but we have a certain amount of time

regardless that's negotiated to get a commitment letter and a

commitment letter then really is a i guess what's a commitment to lend to

you by the by your financial institution and you know we've just we've heard it

described by some mortgage bankers in the industry as you know a legal

obligation and such but you know to be honest we have a lot of doubt in

holding one of those up in court but um you know what it is is essentially

you know it's much more firm versus a pre-approval letter right so when you

have a pre-approval letter um it's more of a sort of you know partially

underwritten this is what if everything checks out what they should

expect to be able to lend to you versus a commitment letter is they've

they're essentially saying that they've substantially underwritten you

and you are you know approved for this loan subject to

any additional sort of items to be cleared prior to closing if any now you

may be in a good spot and there are no additional items and you're essentially

good to go but

most times those commitment letters come with these sort of additional

contingencies essentially they're outs for the bank so

you know prior to closing for this commitment letter to be fulfilled you

know x x and x needs to happen for example they might need to see

additional statements from you additional other missing documentation

that you haven't provided yet and such and other conditions such as you

obviously still having employment and such prior to closing so

always take a look at the fine print in the commitment letter you know it is a

obligation to lend to you it's a commitment letter and what's a

commitment to you to lend hence the the name

but it's certainly not airtight there are many outs for the bank

even if you don't owe them any additional documentation you know for

example we mentioned the scenario of job loss right so if you you know if you

lose your job prior to closing well the bank will typically call your

employer you know a day or so before closing to

verify employment and if they find out that you've lost your job and you no

longer have income then you know one of the outs in the commitment letter is

they'll be able to cancel your funding then you're going to be really out of

luck and in a bad situation that's the answer in a nutshell is is

the commitment letter is a firm commitment to lend to you but it always

comes with a bunch of outs and oftentimes requirements for additional

documentation if any of those are not met um if any of the outs are triggered

such as again the job loss scenario mentioned you know the bank yes can back

out of your commitment to lynn and and you can have a funding crisis you know

the day or two before closing and have to scramble to find some way to get the

rest of the funds so it can happen we hope it doesn't happen to many people

but it is definitely a scenario to be aware of

so there you have it we hope you found this video helpful and not too dreary

if you if you did please hit like or subscribe

you know we really appreciate it leave us a comment below if you have any

questions we'll get back to you right away and of course if you're looking to

buy or sell in new york or florida we can help you save up to six percent when

you sell with a agent assisted fsbo listing or if you want a bit more help

we have one percent for full service option and if you're looking to buy of

course we can help you save up to two percent or more back on your

purchase by giving you two thirds of the buyer

agent commission through our  Hauseit Buyer Closing Credit program

we cover all of new york city long island hudson valley and south florida

we cover miami-dade broward palm beach barton and st lucie counties my name is

chris at Hauseit and we'll see you on the next one