Term Sheet
A term sheet (or letter of intent) is a lender's non-binding summary of proposed loan terms: amount, rate, term, amortization, fees, recourse, reserves, and covenants. It precedes full underwriting and legal documentation. Though not a commitment, it anchors the negotiation — terms rarely improve after signing.
Compare term sheets on all-in cost, not headline rate: origination and exit fees, IO periods, prepayment structure, required reserves, and covenant triggers can easily outweigh a 25 basis point rate difference.
Watch for re-trade risk: aggressive term sheets from some lenders tighten after due diligence. A slightly worse quote from a lender known to close as quoted is often the better deal.