When must a lender provide a Loan Estimate to a borrower?

A lender is required to provide a Loan Estimate to a borrower within three business days of receiving a loan application. This requirement is part of the regulations set forth by the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA), which are designed to ensure transparency in the lending process.

The Loan Estimate serves several important purposes, including providing borrowers with clear and understandable information about the terms of their loan, the estimated costs, and potential fees associated with the mortgage. By mandating that lenders deliver this information quickly after the application is submitted, the regulations help borrowers make informed decisions and compare loan offers effectively.

This timing allows borrowers to have a realistic expectation of what their financial commitment will be early in the process, ensuring they can evaluate their options before moving forward.

In contrast, receiving the Loan Estimate at closing or only upon request would not provide the borrower with the necessary information in a timely manner, potentially leading to confusion and inadequate preparation for the closing process. Immediate issuance upon application submission would not account for the necessary processing time.