What is a Loan Estimate?

A Loan Estimate is a vital document that provides borrowers with clear and detailed information about the key features, costs, and risks associated with a mortgage loan. This document is designed to help borrowers understand the terms of their loan, allowing them to make informed decisions when comparing different mortgage offers.

The Loan Estimate outlines important information such as the loan amount, interest rate, monthly payment, and estimated closing costs, which are all crucial for borrowers to consider before committing to a loan. It is standardized and must be provided to borrowers within three business days of applying for a mortgage, ensuring that consumers have timely access to pertinent financial information.

Other choices do not accurately capture the complete purpose of the Loan Estimate. While it may include a summary of financial terms, the most significant aspect of the Loan Estimate is its comprehensive overview of the key features and costs associated with the loan, making the selected answer the most accurate representation of the document's purpose.