What is a loan estimate and when must it be provided to the borrower?

A loan estimate is a crucial document in the mortgage process that provides borrowers with a summary of loan terms, projected monthly payments, and estimated closing costs. The law requires that this document be provided to the borrower within three business days of receiving their application. This timing is essential as it ensures that borrowers have the necessary information early in the process, allowing them to compare different loan options and understand the costs associated with their potential mortgage.

This document includes key details such as the loan amount, interest rate, estimated monthly payment, and a breakdown of estimated closing costs, making it a vital tool for informed decision-making and budget planning. By requiring that it be delivered quickly, the regulation helps to promote transparency and protect consumers from unexpected fees or unfavorable loan conditions later on in the process.