When is a loan officer required to provide a borrower with a Loan Estimate?

A Loan Estimate is a crucial document in the mortgage lending process, and it is designed to provide borrowers with clear information about the key features, costs, and risks of the mortgage loan for which they are applying. The requirement to provide a Loan Estimate within three business days of receiving a loan application is established by the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA), which aim to enhance transparency and protect borrowers.

This three-day time frame begins when the lender receives a completed loan application, which includes the borrower's name, income, social security number, property address, estimated value of the property, and the loan amount requested. The intent behind this rule is to ensure that borrowers have sufficient time to understand the terms and costs associated with a mortgage before they proceed further with the process.

Providing this estimate within three business days allows borrowers to compare different loan offers more easily and make informed decisions regarding their financing options. In this context, the other options do not align with federal regulations, as the requirement is specifically set at three business days post-application, rather than at one business day, five days after closing, or contingent upon loan approval.