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Simple English definitions for legal terms
letter of commitment
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A quick definition of letter of commitment:
A letter of commitment is a written promise from a lender to give someone a loan. The letter usually says how much money the lender will give, how much interest the borrower will have to pay, and other important details. It's also called a commitment letter.
A more thorough explanation:
A letter of commitment is a written document that outlines an offer made by a lender to grant a mortgage loan. It includes details such as the loan amount, interest rate, and other terms of the loan.
For example, if someone is looking to buy a house and needs a mortgage loan, they may receive a letter of commitment from a lender. The letter will state the amount of money the lender is willing to loan, the interest rate, and any other conditions that must be met.
This letter is important because it shows that the lender is committed to providing the loan and gives the borrower a clear understanding of the terms of the loan. It can also be used as proof of financing when making an offer on a house.