Oregon Real Estate Practice Test

A commitment from a mortgage lender is what kind of document?

1. Affidavit

2. Approval letter

3. Loan commitment document

4. Title deed

The correct answer is: Loan commitment document

A commitment from a mortgage lender is referred to as a loan commitment document because it serves as a formal agreement from the lender that specifies the terms and conditions under which they are willing to provide financing for a property. This document outlines the loan amount, interest rate, and any contingencies that must be met before the loan can be finalized. A loan commitment document is an essential part of the mortgage process as it provides borrowers with certainty regarding their financing, enabling them to proceed with their plans for purchasing a home or property. It acts as proof that the lender has reviewed the borrower's financial situation and agrees to lend them the necessary funds, as long as the stipulations set forth in the commitment are satisfied. In contrast, an affidavit is a sworn statement made in writing, typically used for legal purposes, while an approval letter is more informal and may not contain all the detailed terms of the loan. A title deed, on the other hand, is a legal document that represents ownership of a property and is unrelated to the mortgage financing process. Thus, the loan commitment document accurately captures the specific nature of the lender's agreement to provide a mortgage.