What does a lender's loan commitment guarantee?

A lender's loan commitment guarantees approval for a specific loan for an identified property. This document signifies that the lender has reviewed the borrower's financial information and has preliminarily agreed to provide financing under specified terms, assuming that all conditions stated in the commitment are met. It is a critical step in the mortgage process, as it indicates to the borrower that they have secured a loan, thus allowing them to proceed confidently with the home-buying process.

This commitment usually includes details such as the loan amount, interest rate, and any conditions that must be fulfilled before the loan can be disbursed. By obtaining a loan commitment, the borrower can also provide assurance to sellers that their financing is secure, which can be a significant advantage in competitive real estate markets.