What must lenders provide to applicants within three business days of receiving a loan application?

Lenders are required to provide a Loan Estimate to applicants within three business days of receiving a loan application. The Loan Estimate is a standardized form that outlines the key features, costs, and risks of a mortgage loan, helping borrowers make informed financial decisions. This requirement is part of the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) integration rule, which aims to enhance transparency in the mortgage lending process.

The Loan Estimate provides critical information, such as the estimated interest rate, monthly payment amounts, and total closing costs, enabling applicants to compare different loan offers easily. This early disclosure is intended to ensure that borrowers are well-informed about the terms of the loan and can budget accordingly.

In contrast, the Closing Disclosure, which provides similar information but is given shortly before closing on the loan, is distinct from the Loan Estimate. An Appraisal Report is an assessment of the property's value and is typically ordered after Loan Estimate issuance. A Commitment Letter is a formal document from the lender indicating that the loan application has been approved and is contingent on any conditions that must be met before closing. These other documents serve different purposes and timelines in the mortgage process, highlighting the importance of the Loan Estimate as an initial step in providing transparency