What is a Commitment?

What is a Commitment?

• A. A verbal promise from a lender to lend
• B. A written notification from a lender states the terms of the loan
• C. A loan rate lock for 60 days
• D. A payment schedule agreement

Answer: (B)

A commitment is the lender’s formal, written promise to fund the loan under specific terms. It goes beyond an oral assurance by laying out the exact loan amount, interest rate, fees, conditions that must be met, and an expiration date. This written document, often called a commitment letter, binds the lender to those terms pending the borrower satisfies any underwriting conditions and final closing steps. The other concepts don’t fit because a verbal promise isn’t enforceable as a formal commitment, a rate lock protects the interest rate rather than committing to fund on defined terms, and a payment schedule is about repayment after closing, not the lender’s promise to lend.

A commitment is the lender’s formal, written promise to fund the loan under specific terms. It goes beyond an oral assurance by laying out the exact loan amount, interest rate, fees, conditions that must be met, and an expiration date. This written document, often called a commitment letter, binds the lender to those terms pending the borrower satisfies any underwriting conditions and final closing steps. The other concepts don’t fit because a verbal promise isn’t enforceable as a formal commitment, a rate lock protects the interest rate rather than committing to fund on defined terms, and a payment schedule is about repayment after closing, not the lender’s promise to lend.