What does a Loan Estimate primarily inform the borrower about?

A Loan Estimate primarily serves to inform the borrower about the projected monthly payments and closing costs associated with a mortgage loan. This document is essential in providing transparency in the lending process, allowing borrowers to understand the financial implications of their loan. It outlines key financial details such as the interest rate, monthly mortgage payment, and the estimated costs at closing.

The inclusion of projected monthly payments helps borrowers assess their budget and determine whether the loan fits their financial situation. Additionally, detailing closing costs prepares borrowers for the financial obligations that come before finalizing their mortgage. By consolidating all this information in one document, the Loan Estimate serves to empower borrowers to make informed decisions and compare different loan offers effectively.