In the St Louis area, the the Realtor Association and Bar Association Residential Sale Contract includes language that allows a home buyer to apply for a loan and the means to back out of the contract due to the inability to obtain financing. There is a deadline in which this contingency must be excercised, which is called the loan commitment date. The section of that contract is below:
"If Buyer does not deliver written notice, provided by Buyer's lender, to Seller or listing
Broker, of Buyer's inability to obtain a loan commitment on the terms described below on or
before xx-xx-2012 (the "Loan Commitment Date") then this condition shall be
deemed waived and Buyer's performance under this contract shall thereafter not be conditioned upon
Buyer's obtaining financing. If lender will not give Buyer such written notice then Buyer may directly notify
Seller or listing broker (on or before the Loan Commitment Date) by providing a notarized affidavit that
Buyer has complied with all of the terms of this paragraph and that despite request, Buyer was unable to obtain
such written notice from lender."
Sometimes buyer's misunderstand what they have when they are pre-approved. A pre-approval is normally a "pre-screening" of information conveyed by telephone and a check of the credit score. When writing up an offer to purchase real estate, or discussing the loan approval / commitment, buyers occasionally say "I already have that;" confusing the pre-approval they already have.
Getting loan commitment from a lender takes place after a written application has been approved by the mortgage bank underwriter and usually involves paying for an appraisal, and providing title work, tax returns, and employment verification to the lender. Once a loan file is submitted to the underwriting department, a response to the application is received, which is usually called "conditional approval" and all the conditions of approval are stated, which must be fulfilled prior to receiving the completed loan commitment. Usually agents give three or more weeks for the lender to complete the loan process and provide loan commitment.