The loan estimate form is a 3-page document that a lender will provide a borrower which important information regarding the costs of closing the loan and payments moving forward.
The lender is legally obligated to deliver the loan estimate form within 3 business days of receiving the loan application.
Because of the various expense items that a borrower will incur when signing up for a mortgage, this form serves the purpose of helping consumers better understand why they are paying these costs and where they go to.
This document will include details like:
- Date of issue
- Name of applicant(s)
- Property address
- Loan amount
- Term
- Interest rate
- Monthly payment
- Prepayment penalty
- Balloon
- Mortgage insurance
- Escrow account
- Appraisal fee
- Homeowners insurance
- Property taxes
- etc
Together with the closing disclosure form, it replaces the GFE that was found to be inadequate in assisting borrower to understand more about the costs that go into underwriting.
Overall, the combination of both forms are better tools than something like APR in helping borrowers compare between two or more home loans.