A written commitment
by a lender, confirming the terms under
which a loan or a mortgage will be granted
to a borrower. The terms typically include
specific interest rate together with a time
period that the lender is bound by the
commitment.
Letter of commitment
is not a mortgage loan guarantee, and is not
a legal document, and only states that based
on the facts that have so far been provided
(but are unverified) the lender is willing
to extend the funding.
It is strongly
advised against treating commitment letters
as loan guarantees, in case any of the facts
stated on the application can not be
verified, the lender has the right not to
provide any funding.
Loan guarantees are
those where the lender has verified all the
facts stated on a mortgage application and
is bound by the contract.
A letter or document
issued by a lending institution on behalf of
a customer authorizing the person named to
withdraw a specific amount of money based on
certain prearranged terms and conditions.
Letters of credit are
usually associated with commercial ventures.
Often used in
development projects, the letter of
guarantee assures that should the borrower
require additional funding to complete the
project, such funding will be provided.
A written, general
understanding of the parties setting out
various provisions, covenants, and other
matters that may ultimately lead to a
detailed agreement between those parties.
A letter of intent is
viewed as a a preliminary agreement between
the parties and not a formal contract.
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