What is the function of a loan estimate provided to borrowers?

The loan estimate serves a crucial purpose in the mortgage process by detailing the terms and estimated costs associated with the loan. This document provides borrowers with a clear breakdown of key factors, including the interest rate, monthly payment amount, estimated closing costs, and other loan features.

By offering this comprehensive overview, the loan estimate enables borrowers to understand the financial implications of the mortgage they are considering. It also facilitates comparisons between different loan offers from various lenders, helping consumers make informed decisions and select the option that best fits their financial situation.

The other choices focus on aspects that are not directly addressed by the loan estimate. For example, credit score impacts, employment verification, and property valuation play roles in the loan application and approval process but are not included in the loan estimate itself. Thus, the accurate understanding of the loan’s terms and costs is the primary function of the loan estimate.