What must a lender disclose on a Loan Estimate before I commit to a mortgage?

What the Law Says

The Real Estate Settlement Procedures Act (RESPA), as amended by the Dodd-Frank Act and implemented by Regulation Z, mandates standardized mortgage disclosures—including the Loan Estimate—to help borrowers understand loan terms and avoid surprises at closing.

Under federal law, lenders must provide a Loan Estimate form within three business days after receiving a consumer’s complete mortgage application. This form replaces the older Good Faith Estimate and Truth-in-Lending Disclosure for most closed-end home loans.

The Loan Estimate must clearly disclose the loan amount, interest rate, estimated monthly payment (including principal, interest, taxes, and insurance), projected payments over time, total closing costs, and itemized fees (e.g., origination charges, appraisal, title services). It also discloses whether the loan has features like prepayment penalties or adjustable rates.

While 12 U.S.C. § 2601 sets RESPA’s foundational purpose—ensuring consumers are provided with 'greater and more timely information' about settlement costs—it does not itself list disclosure details. Those specifics are codified in Regulation Z (12 C.F.R. § 1026.37), which implements the Truth in Lending Act (TILA) and integrates with RESPA requirements.

Statutory Text

The Congress finds that significant reforms in the real estate settlement process are needed to ensure that consumers throughout the Nation are provided with greater and more timely information on the nature and costs of the settlement process.

— 12 U.S.C. § 2601 — Congressional findings and purpose

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