Standard Loan Conditions
Even when your loan is approved, it will be approved based on certain loan conditions or loan contingencies. Some loan conditions are standard for all loans, such as the condition that you buy hazard insurance in the amount of the mortgage loan and name the lender as an insured party on the policy. Other conditions may be specific to your loan. The lender could approve the loan on the condition that you pay off your student loan to reduce your monthly debt or that you provide a certified copy of your child support agreement to prove that you are entitled to that income.
These are some standard loan conditions:
- Appraisal exceeds certain value
- Mortgage insurance
- A title commitment
- Hazard and possible flood insurance
- Clear title report and lender’s policy of title insurance
- Clean termite inspection and certification
- Other inspections common in the area (radon, lead paint, mold or water quality)
These are common conditions, but not standard:
- Property condition contingencies (repairs that must be complete before closing)
- Document contingencies (additional documents that the lender wants as proof of your income or financial condition)
- Other requirements (the loan may be contingent on the sale of other property you own or your ability to pay off a debt or resolve a legal problem)
After the conditions are taken care of, you are ready to move on to the closing process.