An initial disclosure that the lender must send to the borrower within 3 days of receiving a formal loan application for a specific property.
The Loan Estimate (LE) is an initial disclosure that the lender must send to the borrower within 3 days of receiving a formal loan application for a specific property. It is a breakdown of the estimated closing costs and the down payment associated with obtaining the loan.
This initial disclosure is also meant to prevent lenders from “bait and switch” tactics, as most of the Loan Estimate’s fees cannot increase without first providing a new Loan Estimate (known as a "revised Loan Estimate" or "Change in Circumstance"). Because the Loan Estimate is issued so early in the closing process, it will eventually be followed up by a more refined Closing Disclosure (CD).
The borrower cannot sign their final loan documents until at least 7 days after the Loan Estimate has been issued.