When must a Loan Estimate be provided to the borrower?

A Loan Estimate must be provided to the borrower within three business days of receiving a loan application. This requirement is part of the Truth in Lending Act and the Real Estate Settlement Procedures Act (TRID) rules, which aim to ensure that borrowers receive clear and timely information about the costs associated with their mortgage loans.

The purpose of delivering the Loan Estimate promptly is to give borrowers a reasonable amount of time to review the terms before making any commitments, such as paying fees or deciding to proceed with the loan. This three-day window allows for any questions or comparisons to other loan offers, fostering informed decision-making.

The other options do not align with regulatory requirements. Providing the Loan Estimate within five business days or at the time of closing would not meet the deadline set by the regulations, while delivering it before a borrower submits a loan application is not feasible, as the estimate is based on the details provided in the application. Thus, the three-business-day timeframe is crucial for compliance and for protecting the borrower’s interests.