What is the primary purpose of the Loan Estimate?

The primary purpose of the Loan Estimate is to provide a clear and concise summary of the charges a buyer is likely to encounter at settlement. This document is designed to inform borrowers about the costs associated with their mortgage so they can make informed financial decisions. It includes estimates of the loan amount, interest rate, monthly payments, and various fees and costs associated with obtaining the loan, such as closing costs and other expenses.

By giving borrowers this detailed information upfront, the Loan Estimate allows them to compare different loan offers and understand what they will need to pay at closing, ensuring transparency in the lending process. This requirement is part of consumer protection regulations that improve the clarity of financial transactions in real estate.

The other choices do not encapsulate the core function of the Loan Estimate. For instance, summarizing the loan application process, outlining seller responsibilities, or explaining loan repayment options each serve different purposes in the transaction process and do not pertain specifically to the detailed cost breakdown provided by the Loan Estimate.