Explanation of Loan Estimate Form

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The Loan Estimate is a standardized mortgage disclosure form that provides important information to borrowers who are applying for a residential mortgage loan. It is mandated by the Consumer Financial Protection Bureau (CFPB) in the United States under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). • The Loan Estimate form is designed to make it easier for borrowers to understand the terms and costs associated with their mortgage loan. It must be provided to borrowers within three business days of their mortgage application. Here are some key elements typically included in a Loan Estimate: • Loan terms: This section provides details about the loan amount, interest rate, and whether the interest rate can change over time (e.g., adjustable-rate mortgage). • Projected monthly payments: This part of the form outlines the estimated monthly principal and interest payments, as well as any additional amounts for property taxes, homeowner's insurance, and mortgage insurance. • Costs at closing: Here, borrowers can see an estimate of the closing costs associated with the loan, including origination charges, appraisal fees, title insurance, and other fees. These costs are broken down into various categories for easy understanding. • Cash to close: This section shows borrowers the total amount they will need to bring to the closing table, including the down payment, closing costs, and any prepaid amounts for taxes and insurance. • Loan features: The Loan Estimate may also indicate whether the loan has special features like prepayment penalties or balloon payments. • Other considerations: Borrowers are provided with additional information about their loan, including whether the loan balance can increase and whether there are any assumptions or servicing transfers. • The Loan Estimate is meant to be a helpful tool for borrowers to compare loan offers from different lenders and understand the potential costs associated with their mortgage. It promotes transparency in the mortgage lending process, allowing borrowers to make informed decisions about their home financing. • It's important to note that the Loan Estimate is not a loan approval or commitment; it's an estimate of the terms and costs based on the information provided by the borrower at the time of application. A more detailed Closing Disclosure form is provided to borrowers closer to the closing date, which outlines the final loan terms and closing costs. • Find Us On: • Instagram • / workhardingmortgageteam • Facebook • / findaloan • Podcast • https://podcasts.apple.com/us/podcast... • https://spotifyanchor-web.app.link/e/... • LinkedIn • / workharding • YouTube • / @workharding

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