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A commitment letter is a document from a bank stating that you will be approved for a specific loan amount once certain conditions are met. For instance, if you need money for a future project, like building a cabin, you can obtain this letter with a small fee. The letter ensures that, assuming no significant changes occur before the loan is needed, you will secure a loan of $152,000 at a fixed interest rate of 5% for 30 years. This guarantees that the bank will provide the funds when required, alleviating any concerns about financing as your project progresses.
