When Are Lenders Required to Provide the Loan Estimate Form?
Get clarity on when lenders are legally obligated to provide your Loan Estimate, a key step for informed mortgage decisions.
Get clarity on when lenders are legally obligated to provide your Loan Estimate, a key step for informed mortgage decisions.
The Loan Estimate (LE) form serves as a standardized disclosure document to help consumers understand a mortgage loan’s key features, costs, and risks. This document replaced previous disclosures, integrating them under the TILA-RESPA Integrated Disclosure (TRID) rule. Its primary purpose is to enhance transparency in the mortgage lending process.
The form provides a clear summary of important loan terms, estimated payments, and closing costs a borrower can expect. By presenting this information in a consistent format across all lenders, the Loan Estimate facilitates comparison shopping. This allows prospective borrowers to evaluate different loan offers before committing to a specific lender.
Lenders are required to provide the Loan Estimate once a prospective borrower submits a completed application for a mortgage. A completed application is defined by six pieces of information: the borrower’s name, income, Social Security number, property address, estimated property value, and desired loan amount.
Once a lender or mortgage broker receives all six pieces of information, they must provide a Loan Estimate. This requirement applies even if the lender later determines the borrower does not qualify for the loan. This triggers the formal start of the disclosure process.
After receiving a completed application, the lender must provide the Loan Estimate to the borrower within three business days. A business day is defined as a day when the lender’s offices are open for most business functions. This ensures borrowers receive timely information to make informed decisions.
This three-business-day window is a firm requirement, regardless of whether the loan ultimately moves forward to approval or denial. The intent is to provide prospective borrowers with a clear understanding of potential loan terms early in the process.
Once you receive your Loan Estimate, review it carefully to understand the proposed mortgage details. Pay close attention to the estimated interest rate, projected monthly payments, and total estimated closing costs. Comparing these figures across different Loan Estimates can help you identify the most suitable loan product for your financial situation.
After receiving the Loan Estimate, you must indicate your “intent to proceed” before the lender can charge you any fees, except for a reasonable credit report fee. This step signifies your decision to move forward with that specific lender and loan offer.
The terms and costs disclosed on the Loan Estimate are generally valid for 10 business days from the date the form is provided. However, a lender may honor the terms beyond this period, especially if market conditions remain stable or if they have provided a written commitment to do so. It is advisable to inquire about the specific validity period with your lender.