What is a Loan Estimate? | Consumer Financial Protection Bureau (2024)

The Loan Estimate tells you important details about the loan you have requested.The lender must provide you a Loan Estimate within three business days of receiving your application.

The Loan Estimate is a form that took effect on Oct. 3, 2015.

The form provides you with important information, including the estimated interest rate, monthly payment, and total closing costs for the loan. The Loan Estimate also gives you information about the estimated costs of taxes and insurance, and how the interest rate and payments may change in the future. In addition, the form indicates if the loan has special features that you will want to be aware of, like penalties for paying off the loan early (a prepayment penalty) or increases to the mortgage loan balance even if payments are made on time (negative amortization). If your loan has a negative amortization feature, it appears in the description of the loan product.

The form uses clear language and design to help you better understand the terms of the mortgage loan you've applied for. All lenders are required to use the same standard Loan Estimate form. This makes it easier for you to compare mortgage loans so that you can choose the one that is right for you.

When you receive a Loan Estimate, the lender has not yet approved or denied your loan application. The Loan Estimate shows you what loan terms the lender expects to offer if you decide to move forward. If you decide to move forward, the lender will ask you for additional financial information.

See a sample Loan Estimate form with interactive tips and definitions.

Note:You won't receive a Loan Estimate if you're applying for a reverse mortgage. For those loans, you will receive two forms—a Good Faith Estimate (GFE) and an initial Truth-in-Lending disclosure—instead of a Loan Estimate. If you are applying for a HELOC, a manufactured housing loan that is not secured by real estate, or a loan through certain types of homebuyer assistance programs, you will not receive a GFE or a Loan Estimate, but you should receive a Truth-in-Lending disclosure.

What is a Loan Estimate? | Consumer Financial Protection Bureau (2024)


What is a Loan Estimate? | Consumer Financial Protection Bureau? ›

The Loan Estimate shows you what loan terms the lender expects to offer if you decide to move forward. If you decide to move forward, the lender will ask you for additional financial information. See a sample Loan Estimate form with interactive tips and definitions.

What is a loan estimate? ›

When you apply for a mortgage, your lender is required to give you a Loan Estimate: a standardized form that gives you important details about the mortgage you're applying for. The mortgage Loan Estimate includes your estimated interest rate, monthly payment, closing costs and other details.

What is a loan estimate quizlet? ›

Loan estimate. The Loan Estimate is designed to provide information to help borrowers understand the key features, costs, and risks of the mortgage loan for which they are applying.

How accurate is a loan estimate? ›

You want accurate figures. At Homebuyer and plenty of other lenders, these costs get estimated as close to 100 percent accurate as possible. Remember that numbers are never exact upfront. Don't worry about any estimated fees that your lender doesn't dictate.

What would be included in a loan estimate disclosure? ›

The loan estimate can help you understand any mortgage you apply for, whether you're buying a home or refinancing one. For the amount, type, and term of the loan you've applied for, the loan estimate will show your projected closing costs, monthly payment, interest rate, and annual percentage rate, among other details.

Is a loan estimate an approval? ›

When you receive a Loan Estimate, the lender has not yet approved or denied your loan. This is true even if your rate is already locked. The Loan Estimate shows you the terms the lender expects to offer you if you decide to move forward with your loan application. You have not committed to this lender.

Is a loan estimate legally binding? ›

Technically, a loan estimate is only binding on the date it's issued. The lender has to give you the loan, with exactly the terms listed in the loan estimate, if on that day you take steps to accept the loan and lock your rate in.

Do all borrowers have to receive the loan estimate? ›

If there is more than one consumer the Loan Estimate may be provided to any consumer who is primarily liable on the obligation. If one consumer is merely a surety or guarantor then the Loan Estimate must be given to the principal debtor.

What is a loan estimate vs closing disclosure? ›

The Closing Disclosure is a five-page form that presents all the information found in the Loan Estimate but in a finalized form. It shows how much you'll actually pay if you go through with closing and take on the loan.

What happens if my loan estimate is wrong? ›

Your lender is allowed to change the costs on your Loan Estimate only if new or different information is discovered in the process (such as the examples above). If you think your lender has revised your Loan Estimate for a reason that's not valid, call your lender and ask them to explain.

What triggers a new loan estimate? ›

You took out a new loan or missed a payment on another loan, and your credit score has changed. Your lender could not verify your overtime, bonus, or other income. The interest rate on your loan was not locked, and locking the rate caused the points or lender credits to change.

What is the 7 day rule for loan estimate? ›

Under the TRID rule, credit unions generally must provide the Loan Estimate to consumers no later than seven business days before consummation. Members must receive the Closing Disclosure no later than three business days before consummation.

What fees cannot change on a loan estimate? ›

However, there are some fees listed on your loan estimate that legally cannot change. These include fees paid to a broker and transfer taxes. If there are any changes of circ*mstance, you receive a revised loan estimate.

When to ask for a loan estimate? ›

Loan estimates are issued after you fill out a lender's application — within three days or less. The form will detail the terms of the loan they're offering you. You can then use this to compare different lenders on terms, interest rates, closing costs, and other details.

Does a loan estimate have to be signed? ›

There is no requirement for the loan estimate to be signed, regardless of the delivery method. So, you should be okay with other documentation in the file showing when the loan estimate was delivered.

Does getting a loan estimate hurt your credit? ›

Getting multiple Loan Estimates won't hurt your credit, so long as you get them all within the same 45-day window. Learn why, and what happens when a lender checks your credit.

Is a loan estimate the same as a pre-approval? ›

A loan estimate is not a pre-approval or approval for a mortgage loan. It only shows you what the lender expects to offer if you decide to move forward with the loan. If you choose to move forward, formal underwriting will determine if you are approved for the loan.

Why is loan estimate so high? ›

Here are some common reasons why the estimated charges in your Loan Estimate might increase: You decide to change the kind of loan, for example moving from an adjustable-rate to a fixed-rate loan. You decide to reduce the amount of your down payment. The appraisal on the home you want to buy came in lower than expected.

What is the difference between a loan estimate and a closing disclosure? ›

Two key documents, especially for first-time homebuyers, are the loan estimate and the closing disclosure. The former provides important details about your lender's mortgage offer, while the latter finalizes those details for closing.

Top Articles
Latest Posts
Article information

Author: Msgr. Refugio Daniel

Last Updated:

Views: 5893

Rating: 4.3 / 5 (54 voted)

Reviews: 93% of readers found this page helpful

Author information

Name: Msgr. Refugio Daniel

Birthday: 1999-09-15

Address: 8416 Beatty Center, Derekfort, VA 72092-0500

Phone: +6838967160603

Job: Mining Executive

Hobby: Woodworking, Knitting, Fishing, Coffee roasting, Kayaking, Horseback riding, Kite flying

Introduction: My name is Msgr. Refugio Daniel, I am a fine, precious, encouraging, calm, glamorous, vivacious, friendly person who loves writing and wants to share my knowledge and understanding with you.