Funding a loan involves the process of supplying the agreed-upon amount of money for a loan. After loan approval and commitment, the lender forwards the necessary cash at the closing stage.
Holdback refers to money that is not paid until certain conditions or events have occurred, such as a floor loan of a loan commitment or retainage on a construction contract.
A loan application is a necessary document required by a lender before issuing a loan commitment. It includes key details such as the borrower's personal information, loan amount and terms, property description, and financial and employment data.
A decision by a lender to extend credit in a specified amount, often accompanied by a loan commitment outlining the terms and conditions. Also referred to as Loan Preapproval when provided before formal loan application.
A Loan Commitment is an agreement by a lender to provide a borrower with a specified amount of funding under specific terms at a future date. This commitment often includes a locked-in interest rate, providing certainty to the borrower.
Mortgage Out refers to the practice of obtaining financing in excess of the cost to construct a project. During periods of relaxed monetary policy, developers could mortgage out by securing a permanent loan commitment based on a higher percentage of a project's completed value, allowing them to borrow more than the development costs.
A commitment made by a lender to make a sum of money available at specified terms for a specified period, subject to the payment of a standby fee by the borrower.
Takedown refers to the instance when a borrower actually accepts money from a lender under a line of credit or loan commitment, often structured in stages to align with project milestones.
