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Loan Commitment
The loan commitment is the contractual promise made by a lender or some other financial institution. With this commitment, the lender promises to make a loan or perhaps insure a loan at a specified time for a specified amount of money. With a loan commitment in hand, the home buyer can confidently go forward with making an offer on a home or completing a home purchase. The loan commitment is something quite different from the pre-approval letter that lenders typically distribute to potential home buyers. Though the pre-approval letter also features a possible date of distribution and a suggested amount, it is not a binding document that would hold up in court. The loan commitment represents a signed contract that the home buyer could then use as the basis for a lawsuit against the lender if the lender were to back out of the transaction.