According to Google search results – 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.
A mortgage commitment letter is given by banks and brokerages. In its integrity, it is a lender/bank on paper committing to an amount of money to lend. With conditions attached – Mortgage Funding Conditions. Mortgage commitment letters are similar to an Intent To Lend.
Commitment letters have a closing date that can be changed. Changes could alter/increase the rate, and add additional mortgage conditions. In addition, there is an expiry date. Commitments cost the lenders/banks money, so they will expire this commitment if not handed back in. Commitment expiry dates vary amongst the lenders/banks. Typically they are 10 to 20 days after the committed date of the commitment letter, which is generally the day that you get told about your approval.
Depending on the lender you could have a Rate Float Down on your commitment letter. This would mean if you had a certain rate, and rates dropped, you as a borrower would get the lower rate. Many lenders offer rate float downs. Alt-A, B Lending, and other lender types do not apply to rate float downs.
