What Is a Mortgage Commitment Letter and Why Is It Important for Sellers?

When your buyer says they have a mortgage commitment, it sounds reassuring — but what does it actually mean? On Long Island, the mortgage commitment letter is a major milestone in the transaction. It reduces risk, but it doesn’t eliminate it entirely.

What Is a Mortgage Commitment Letter?

A mortgage commitment letter is issued by the buyer’s lender after:

  • Initial underwriting review

  • Income and asset verification

  • Credit review

  • Property evaluation

It states that the lender agrees to fund the loan, subject to certain conditions.

It is stronger than a pre-approval — but not the same as “clear to close.”

Why It Matters for Sellers

For Long Island sellers, the mortgage commitment:

  • Signals that financing is progressing

  • Reduces the likelihood of deal collapse

  • Triggers important contract timelines

  • Often marks the removal of the financing contingency

Once the commitment is issued, the transaction becomes significantly more stable.

What “Conditional Commitment” Means

Most commitment letters are conditional.

Conditions may include:

  • Updated bank statements

  • Final employment verification

  • Insurance documentation

  • Satisfactory appraisal

  • Title clearance

Until those conditions are satisfied, the lender can still delay funding.

Can a Deal Fall Apart After Commitment?

Yes — though less commonly.

Deals can still face issues if:

  • The buyer changes jobs

  • The buyer makes large purchases

  • Credit changes occur

  • The appraisal is challenged

  • Conditions are not met on time

This is why buyer discipline matters even late in the process.

What Sellers Should Watch For

When the mortgage commitment is issued:

  • Confirm the commitment deadline was met

  • Review whether the contingency is formally removed

  • Track remaining lender conditions

  • Maintain communication through attorneys

Commitment reduces risk — it doesn’t eliminate it.

Why This Step Is So Important on Long Island

Because most Long Island transactions involve financing, the mortgage commitment is one of the most critical checkpoints between contract and closing.

It separates strong, prepared buyers from uncertain ones.

FAQs

Is a mortgage commitment the same as final approval?

No. It usually includes conditions that must still be satisfied. If you want help interpreting your buyer’s commitment, you can explore that here: 👉 https://www.theericbermanteam.com/contact-us

Can a buyer lose their loan after receiving a commitment?

Yes, if they fail to meet conditions or their financial situation changes. Understanding risk factors helps — you can learn more here: 👉 https://www.theericbermanteam.com/contact-us

Does a mortgage commitment remove financing risk completely?

It significantly reduces risk but does not eliminate it. Clear monitoring helps — you can get guidance here: 👉 https://www.theericbermanteam.com/contact-us

What happens if the buyer misses the commitment deadline?

Contract terms determine consequences. Strategic review protects sellers — you can explore next steps here: 👉 https://www.theericbermanteam.com/contact-us

Should sellers feel confident after commitment is issued?

Yes — cautiously. It’s a strong sign, but the deal isn’t closed yet. You can start reviewing your timeline here: 👉 https://www.theericbermanteam.com/contact-us

Eric Berman, REALTOR®
Compass Greater NY
917-225-8596
eric@ericbermanteam.com
www.theericbermanteam.com

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