Created by the Consumer Financial Protection Bureau’s (CFPB’s) TILA-RESPA Integrated Disclosure (TRID) rule, the Loan Estimate (LE) is a standard, three-page form that consumers receive after applying for a mortgage. It is intended to help the customer better understand the terms of their mortgage and make it easier for them to comparison shop with other lenders and mortgage products.
An LE includes the estimated interest rate, monthly payment, total closing costs, estimated costs for taxes and insurance, and information on how the interest rate and payment terms may change in the future. It may also contain information on special loan features such as prepayment penalties and negative amortization.
The lender must provide the LE to customers within three business days of receiving their application. The LE is not required on transactions involving reverse mortgages, a home equity line of credit (HELOC), a manufactured housing loan not secured by real estate, or a loan through certain types of homebuyer assistance programs; in those cases, the customer will receive a Truth in Lending (TIL) disclosure instead.