What is a mortgage commitment?

A mortgage commitment refers to a lender's promise to provide funding for a loan after reviewing the application and ensuring that the borrower meets all necessary criteria, such as creditworthiness and income verification. This commitment signifies that the lender is ready to proceed with the loan, contingent on certain conditions being met, such as a satisfactory appraisal and title search.

This process typically follows a thorough evaluation during which the lender assesses the likelihood that the borrower will repay the loan. A mortgage commitment serves as an assurance to both parties involved; the borrower gains confidence in obtaining financing, while the lender effectively locks in the terms of the loan for the borrower.

Understanding this definition is crucial as it distinguishes a mortgage commitment from other concepts in real estate. For instance, maintaining the property is a responsibility of the homeowner, not related to the financing of the transaction. A document confirming a property's price pertains to the sales contract rather than the lending aspect. Similarly, a legal agreement between the buyer and seller is foundational to the transaction but does not involve the lender's evaluation or commitment to funding.