A loan approval or commitment is made after a lender agrees to make a mortgage loan.  Lenders will often provide a written loan approval or commitment, which describes all of the major terms of the agreement, such as the loan amount, interest rate, fees, and charges.  

Does It Make a Difference If a Loan Approval/Commitment Is In Writing?

Written loan approvals or commitments are not always required by law, but they are always a good idea because without writing, nobody will be able to prove what the original terms of the loan were if the bank decides to charge more.  Courts may believe a financial institution more than a person unless there is written proof.  

As a tip, if a lender does not provide a written loan approval or commitment, have the lender or broker provide a written terms sheet which includes the principal amount of the loan, the interest rate, and the length of the loan term.  If a lender will not provide written confirmation of the loan terms early in the process, it is probably a good idea to continue shopping around for a better institution.

What Should I Look For In My Loan Approval/Commitment?

You should look at the final terms of the loan and make sure they are what was promised and what is wanted.  If the final loan terms have parts that are unexpected or difficult to understand, ask the lender what it means and why it is there.  Continue to negotiate and push for better deals.  Just because a bank provides you with a loan commitment does not mean you must accept the loan and sign loan documents.  You can still say no and a bank cannot force you to borrow their money.

When Will I First See This Document?

You should receive this document a reasonable time before being asked to sign final loan documents.  This will give you an opportunity to decide if you really want this loan and to catch any mistakes there might be.  Always ask for a written loan approval or commitment and store it in a safe place.  

Do I Need an Attorney?

Dealing with financial matters such as a mortgage loan is often confusing and stressful.  Consult a real estate attorney for advice or to help you if you have any problems.