What is a loan estimate?

A loan estimate is a crucial document provided to borrowers within three days of applying for a mortgage loan. It presents important details about the mortgage, including the loan amount, interest rate, monthly payment, and estimated closing costs. This form is designed to help borrowers understand the costs associated with the loan and compare offers from different lenders.

The loan estimate includes clear, straightforward terms that reveal the total costs of the loan, such as any potential fees for services like title searches, appraisals, and insurance. By consolidating these details into one document, borrowers can make informed decisions about which loan terms best suit their financial situation.

The other options do not accurately describe a loan estimate. A home inspection report is unrelated as it focuses on the condition of the property, an agreement between a buyer and seller outlines terms specific to the sale and not the loan, and a summary of property taxes and insurance costs is only a small part of what the loan estimate covers, which encompasses the complete financial picture of the mortgage.