New Mortgage Documents for 2015: Loan Estimate and Closing Disclosure
Here’s what you should know about these new mortgage documents coming in August 2015
The ‘Loan Estimate’ Form Helps You Comparison Shop As its name implies, the new Loan Estimate form is designed to give borrowers an approximated view of the full cost of the mortgage loan. In this context, “full cost” means that the form shows the various fees and charges that can inflate the amount of money due at closing. Many home buyers are surprised by the different lending fees that can pile up along the way. There’s a fee for everything, from the initial application to the final document preparation. The Loan Estimate form offers an estimated breakdown of these various charges that will be due at closing. More importantly, it shows the amount being borrowed, the interest rate being assigned to the loan, and whether or not there are prepayment penalties.
This form standardizes the loan estimating process, which makes it easier for consumers to comparison shop when getting quotes from different lenders. Lenders must provide this document within three days of the application. The new Loan Estimate form replaces the early Truth in Lending Statement and the Good Faith Estimate, two documents that often contained duplicate information. By rolling two documents into one, and by presenting the information in a more consumer-friendly manner, CFPB hopes to reduce confusion and better prepare borrowers for the closing process.