When must a loan estimate be provided to the borrower?

A loan estimate must be provided to the borrower within three business days of receiving a loan application. This requirement is part of the Truth in Lending Act and the Real Estate Settlement Procedures Act, which aim to ensure that borrowers receive timely and clear information about the costs associated with their mortgage. By providing the loan estimate within this timeframe, lenders give borrowers the opportunity to understand the terms of the loan, the estimated monthly payments, and the closing costs, which can significantly influence their decision-making process.

This rule is in place to promote transparency and ensure that borrowers have sufficient time to compare loan offers, which is crucial for making informed financial decisions. The requirement is designed to foster competition among lenders and protect consumers from unexpected costs or unfavorable loan terms later in the process.