called a loan estimate today, and it is basically an upfront quote of all the different costs, fees, interest rates, etc., that buyers can expect to pay if they proceed with a loan from that lender. It explains which charges can change before settlement and which charges must remain the same. It usually also contains a chart that compares multiple mortgage loans and settlement costs, making it easier for the borrower to shop for the best loan. In the loan estimate phase, the various fees that are associated with getting a loan to buy a property are compiled. It is going to have estimated appraisal fees, inspection fees, and estimated closing fees. For example, if you pay the title insurance, (which they do in some areas), then an estimate for the title insurance cost is prepared and factored that into the loan estimate. The loan estimate is designed to give borrowers important information while they shop for a loan. Borrowers are encouraged to shop around to multiple lenders to determine which company offers the best deal for their needs. There’s usually a length of time stated in the estimate that you can use to shop and decide. After that time period is up, the loan estimate will be invalid and a new estimate will have to be obtained. The loan estimate may be provided by a mortgage broker or the lender. When a borrower obtains a loan estimate, it shows the lender that the borrower has at least some interest in working with them. However, when the borrower is given a loan estimate, loan originators are only permitted to charge for the cost of a credit report and are not permitted to charge for appraisal, inspection, or other similar settlement services.
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