Oregon Real Estate Practice Test

Which type of document indicates that a mortgage lender will provide loan funds?

1. Title insurance document

2. Commitment document

3. Appraisal report

4. Purchase agreement

The correct answer is: Commitment document

The correct choice indicates that a commitment document is a formal agreement from a lender to provide funds for a mortgage loan, subject to certain conditions. This document represents the lender's promise to extend credit to the borrower, confirming that they have reviewed the borrower's financial information and have deemed them creditworthy. It outlines the terms of the loan, such as the amount being offered, the interest rate, and any conditions that must be met before closing. In this context, the other options serve different purposes. A title insurance document protects against defects in the title to the property, ensuring the lender and borrower have a clear title. An appraisal report provides an estimate of the property's value, which is essential for the lender to determine how much they are willing to lend based on collateral. A purchase agreement outlines the terms under which a property will be bought and sold but does not guarantee loan funds from a lender. Therefore, the commitment document specifically communicates the lender's intent to provide loan funds, distinguishing it from the other options.