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Finance: What is a Commitment Letter? 5 Views

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Description:

What is a Commitment Letter? A commitment letter is a document that is issued by a lender to a borrower pursuant to a full fledged loan agreement contract. The commitment letter is legally binding and spells out the amount of the loan and the terms under which the loan will be effectuated to the borrower.

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English Language

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Transcript

00:00
Finance a la shmoop what is a commitment letter? dear Rebecca it's been fun and
00:08
all but asking me to move in with you was a real turnoff so uh have a nice [Rebecca reading letter]
00:14
life yeah that would be a fear of commitment letter I know that one well
00:19
well so what's a commitment letter then all right well you need dough but you
00:23
don't need it today you need it in six months when construction is finished on

00:27
your cabin by the lake at that point you'll convert your very expensive
00:31
building loan into a normal mortgage well you can go to the bank and for a [Man walks into bank]
00:36
small ish fee get a commitment letter from them which stipulates that assuming
00:42
nothing material changes between now and then you will in fact then get a loan
00:46
for one hundred fifty two thousand dollars at 5 percent fixed interest rate
00:49
for 30 years the bank is then committed to giving you that loan when you know [Contract stamped with committed]
00:54
eventually you need it that way you don't have to worry about your bank you
00:59
know breaking up with you which is nice because it's tough getting
01:02
the It's not you it's me speech from a guy in a bowtie [Man wearing bow tie talking to a man in the bank]
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