What is a commitment fee?
Commitment fees are small fees that are charged by a lender at the time that a mortgage or other type of loan is extended to an applicant. The commitment fee serves as a sign that the lender is pledging resources to enter into the business arrangement with the borrower. Depending on the current standards and circumstances that apply, the exact amount of the commitment fee will vary. When a lender chooses to extend a loan to an applicant, there are a number of ancillary costs that come into play. The lender incurs costs due to the administrative and clerical tasks that are associated with the loan from the time of issue all the way through to the posting of the final payment. A commitment fee is one of the devices utilized by the lender to partially defer those costs. Generally, the commitment fee will be addressed in the commitment letter that is prepared and sent to the lender. The details will include the terms associated with calculating the fee. Many lenders choose to base the amou
A. This fee is required when the lessee is shopping the deal w/numerous sources. If we approve the transaction and you choose not to follow through with the lease, the fee is relinquished for time spent working the deal. The fee is applied to the lease costs when you opt to proceed. (Terms of the lease are clearly outlined and accepted by the lessee before signing the agreement).Q.
