Commitment (Loan Commitment)

In real estate practice, a commitment is a binding pledge or firm agreement to perform a specific action in the future under stated terms and conditions. Most commonly, the term refers to a lender’s written loan commitment, in which the lender agrees to provide mortgage financing to a specific borrower, subject to outlined conditions such as appraisal, title approval, and verification of financial information. The commitment typically specifies key loan terms, including the interest rate, loan amount, and repayment period. A loan commitment provides assurance to buyers and sellers that financing is likely to be completed, making it a critical element in the successful closing of many real estate transactions.