Definition of "Commitment fee"

Dawna Stone real estate agent

Written by

Dawna Stoneelite badge icon

The Property Shoppe of Central Florida, Inc.

Charge by the lender to keep credit available to the potential borrower. Once the loan is made, interest is charged on the amount borrowed. Real estate businesses often need money available for land development and building construction. Typically, the bank will charge a commitment fee on those funds.

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