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In this Sigma Real Estate Glossary episode, Jimmy O'Done discusses the concept of a commitment letter, which is a binding offer from a lender outlining the mortgage amount, interest rate, and repayment terms. These letters are conditional, meaning the lender will fund the mortgage if certain conditions are met within a specific timeframe. Common conditions include providing additional documents, maintaining a consistent credit score and income, obtaining homeowner's insurance, and showing ability to make required down payments. For a smooth transaction, it is important to comply with these conditions.