What does it signify when an applicant signs the Loan Estimate or the Closing Disclosure?

When an applicant signs the Loan Estimate or the Closing Disclosure, it indicates that they have received the disclosures. This is an essential part of the mortgage process, aimed at ensuring transparency and providing the borrower with all necessary information regarding the terms of the loan, including costs, interest rates, and other important details.

Signing these documents does not imply that the loan has been finalized or that the applicant has agreed to the loan terms; rather, it signifies that the applicant has been informed and acknowledges receipt of the information. This step is crucial because it allows the borrower to review the terms and make an informed decision before moving forward with the loan process.

The Loan Estimate, which is provided shortly after a mortgage application is submitted, must be received by the borrower within three business days. The Closing Disclosure is provided a few days prior to closing and gives the final terms and costs of the loan. Therefore, the act of signing these documents is a formal acknowledgment that the borrower has received this critical information, empowering them to make an informed choice regarding their mortgage.