Answer:
Mountain Bank needs to reissue the note with a 4.5% interest rate.
Explanation:
A mortgage commitment letter sets up a borrower with the top state of readiness to buy a home. Mortgage commitment letters are issued only when the borrower and property meet underwriting requirements.
That means a full mortgage application was taken, the loan file passed through underwriting, and the borrower was approved. Seldomly, with a few minor conditions. A mortgage commitment letter is a document that lets everyone in the real estate transaction (real estate agents, sellers, etc.) is that the lender is prepared to make a loan to the borrower.
This letter usually indicates (i) the type of loan being used, (ii) the amount of money being borrowed, (iii) the length, term or form of the repayment period, as well as (iv) the interest rate assigned to the loan. Mortgage commitments can be conditional, this implies that they come with a list of conditions that must be met before the file can move forward. So, if Mountain Bank sends Gary an executed commitment letter for the mortgage loan, which indicates a rate of interest of 4.5% and at closing, Gary was given a note to execute a rate of 7%. Mountain Bank then tells Gary that interest rates have risen since the commitment letter was issued. Mountain Bank would need to reissue the note with a 4.5% interest rate.
