- A commitment from a lender to make a loan in a specified period of time on specified terms with the understanding that the borrower will not likely draw down the funds.
Related Terms and Acronyms
- Bank — Definition,
- An institution that acts as a financial intermediary by receiving money from depositors and lenders and also lending to borrowers.
- Commitment — Definition,
- A written agreement from a lender promising to lend money on certain terms for a specified time period.
- Commitment Letter — Definition,
- A formal offer by a lender which states the terms under which it agrees to lend money to a home buyer. Also known as a "loan commitment." This letter will indicate the contingencies that must be cleared prior to funding the loan.
- Draw Period — Definition,
- On a line of credit, the draw period is the fixed time when a borrower can make withdrawals from the account. After the draw period expires, the borrower can renew the credit line or may be required to pay the outstanding balance in full, or over time.
- Firm Commitment — Definition,
- A lender's promise to lend money to a specific borrower on specified terms at a certain time.
- Land Draw — Definition,
- A construction loan backed by the value of the land.
- Lender — Definition,
- The bank or mortgage company offering the loan.
- Loan — Definition,
- Letting another party use something of value temporarily.
- Loan Commitment — Definition,
- A lender's promise to advance a specific sum on specific terms.
- Mortgage (mtg) — Abbreviation, Important,
- A mortgage is a contract stipulating a specific real property, typically a residence or building, as collateral for a loan. The mortgage incurs a rate of interest that varies according to term and other features.
- Rate Hold — Definition,
- The length of time, typically between 60 and 120 days, that a lender will guarantee a loan's interest rate once you are locked in.