Take-Out Commitment

AAA

DEFINITION of 'Take-Out Commitment'

A specific type of mortgage purchase agreement. Under a take-out commitment, a long-term investor agrees to buy a mortgage from a mortgage banker at a specific date in the future. Take-out commitments are enforced once a project reaches a particular stage where long-term, rather than short-term, financing is the preferred alternative.

INVESTOPEDIA EXPLAINS 'Take-Out Commitment'

There are a few specific types of investors that purchase take-out commitments. In most cases, these are insurance companies or other financial institutions. They are known as "take-out lenders."

RELATED TERMS
  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Lender

    Someone who makes funds available to another with the expectation ...
  3. Bank

    A financial institution licensed as a receiver of deposits. There ...
  4. Mortgage Originator

    An institution or individual that works with a borrower to complete ...
  5. Retail Lender

    A lender who lends money to individuals rather than institutions. ...
  6. Forbearance

    A temporary postponement of mortgage payments.
Related Articles
  1. How Interest Rates Affect The Housing ...
    Economics

    How Interest Rates Affect The Housing ...

  2. Understanding Your Mortgage
    Personal Finance

    Understanding Your Mortgage

  3. Home-Equity Loans: What You Need To ...
    Options & Futures

    Home-Equity Loans: What You Need To ...

  4. Understanding The Mortgage Payment Structure
    Credit & Loans

    Understanding The Mortgage Payment Structure

Hot Definitions
  1. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  2. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  4. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  5. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  6. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
Trading Center