Which document typically outlines the costs associated with a mortgage loan?

Prepare for the CFPB Mortgage Compliance Training Test. Study with flashcards and detailed questions and explanations. Master your knowledge and excel in your exam!

The document that typically outlines the costs associated with a mortgage loan is the Loan Estimate. This document is provided to borrowers within three business days of applying for a mortgage and offers a detailed breakdown of the estimated costs they will incur throughout the loan process. This includes the loan amount, interest rate, monthly payments, as well as closing costs and other fees, ensuring that borrowers can make informed decisions about the loan and shop around for the best terms.

The Loan Estimate is crucial for transparency, giving borrowers a clear understanding of what to expect financially when taking out a mortgage. It allows comparison between different loan offers, which is essential in fostering competition among lenders.

While the Closing Disclosure also outlines the costs associated with a mortgage loan, it is provided later in the process, typically at least three business days before closing, and reflects the final terms and costs after the loan has been approved. The Appraisal Report, on the other hand, focuses on the property’s value rather than loan costs, and the Underwriting Document relates to the lender's analysis of the borrower's loan application and creditworthiness, not the costs of the loan itself.

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