When is a loan commitment issued

A portfolio loan is when a lender keeps a loan on their books instead of selling it to a third party. For real estate, this means a lender keeps the mortgage instead of pawning it off on a federal insurer such as Fannie A home buyer is Fannie Mae eligible when the government-backed company will buy their mortgage from a lender. A lender — a bank like Chase or Wells Fargo — will provide the mortgage to the home buyer.

Fannie Mae will A condo questionnaire is a form sent to a condo development by a lender when a potential borrower applies for a mortgage.

The questionnaire allows the lender to determine if the condo meets its requirements for a loan Privacy Policy Terms of Use.

Facebook Twitter Reddit Pinterest Email. This is the final step towards getting a lender to commit to giving you a loan. How does this differ from a Mortgage Pre-Approval? The downside of a secured loan commitment is that borrowers who take out too much money and are unable to repay the loan may have to forfeit their collateral.

For example, this could mean losing their home. Unsecured commitments have a higher interest rate, which makes borrowing more expensive.

Loan Basics. Retirement Planning. Home Equity. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page.

These choices will be signaled globally to our partners and will not affect browsing data. We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes.

Your Money. Personal Finance. Your Practice. Popular Courses. Personal Finance Loan Basics. What Is a Loan Commitment? Key Takeaways A loan commitment is an agreement by a commercial bank or other financial institution to lend a business or individual a specified sum of money. Loan commitments are useful for consumers looking to buy a home or businesses planning to make a major purchase.

The loan can take the form of a single lump sum or a line of credit that the borrower can draw upon as needed up to a predetermined limit. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Create a personalised content profile. Measure ad performance.

Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. The Balance Loans. Table of Contents Expand.

Table of Contents. What Is a Loan Commitment? How Loan Commitments Work. Types of Loan Commitments. Examples of Loan Commitments. By Rosemary Carlson. Rosemary Carlson is a finance instructor, author, and consultant who has written about business and personal finance for The Balance since Along with teaching finance for nearly three decades at schools including the University of Kentucky, Rosemary has served as a financial consultant for companies including Accenture and has developed online course materials in finance for universities and corporations.

Learn about our editorial policies. Fact checked by Emily Ernsberger. Article Fact Checked July 25, Emily Ernsberger is a fact-checker and award-winning former newspaper reporter with experience covering local government and court cases.

She also served as an editor for a weekly print publication. Her stint as a legal assistant at a law firm equipped her to track down legal, policy and financial information. Reviewed by Charles Potters. Article Reviewed January 31, Charles is a nationally recognized capital markets specialist and educator with over 30 years of experience developing in-depth training programs for burgeoning financial professionals.

Charles has taught at a number of institutions including Goldman Sachs, Morgan Stanley, Societe Generale, and many more. Learn about our Financial Review Board.