What is the purpose of the Loan Estimate form?

The purpose of the Loan Estimate form is to provide a clear overview of loan terms and costs associated with a mortgage loan. This form is a critical tool for borrowers because it details essential information such as the loan amount, interest rate, expected monthly payments, and total closing costs. It is designed to help borrowers understand the true cost of the loan and to facilitate easier comparisons between different loan products.

By providing a standardized format, the Loan Estimate empowers consumers to make informed decisions regarding their mortgage options. This clarity is particularly important in enabling borrowers to identify whether a loan meets their financial needs and expectations. The other options do touch on aspects of the mortgage process but do not encapsulate the primary purpose of the Loan Estimate, which is about presenting a comprehensive summary of important loan details.