What is a commitment letter?
A commitment letter is a letter from your mortgage lender stating that they’re going to fund your mortgage. (For the difference between a commitment letter and a pre-approval, click here. ) It gets slipped in to your co-op (or even condo) board package to prove that you can, indeed, buy the apartment.
A commitment letter lays out the terms of your loan — such as the interest rate and the length of the loan. It also comes with a rider of additional conditions you must fulfill. These conditions can include your agreement to purchase different kinds of insurance on the property; that you’ll give the lender a letter verifying your employment; and that you won’t take a second mortgage.