What document provides an estimate of closing costs to mortgage applicants within a specific timeframe?

The Loan Estimate is the correct document that provides mortgage applicants with an estimate of closing costs. This document is required by the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). It must be provided to borrowers within three business days of receiving their loan application.

The Loan Estimate includes crucial information such as the estimated interest rate, monthly payment, and total closing costs, empowering borrowers to understand their financial commitments and compare loan offers from different lenders. This transparency is intended to help consumers make informed decisions in the mortgage process.

The Closing Disclosure, while important, serves a different purpose. It is provided closer to the closing date and offers final details about the loan terms and actual closing costs rather than estimates. The Good Faith Estimate may have been used prior to the implementation of the Loan Estimate but is no longer in effect for most transactions. The Application Addendum is not a standardized form related to closing costs but may refer to additional information requested by a lender during the application process.