What is a Loan Estimate?

A Loan Estimate is a standardized form designed to provide borrowers with a clear and detailed summary of the key terms, costs, and potential risks associated with a mortgage loan. It is provided to borrowers within three business days of applying for a mortgage and includes important information such as the loan amount, interest rate, monthly payments, and closing costs. This form is intended to promote transparency and help borrowers understand the financial implications of their loan options so they can make informed decisions.

By detailing the costs and terms, the Loan Estimate serves as a crucial tool for comparing different loan offers, thus enabling consumers to shop for mortgages effectively. Therefore, acknowledging it as a form that details loan terms, costs, and risks is vital for understanding its role in the mortgage application process.