This video explains the Loan Costs section of the mortgage Loan Estimate form. Key terms for which figures are provided include: Closing Costs: the set of fees involved in transferring title of the property to the buyer. Origination Charges: fees the lender collects for the mortgage process. These may include fees for handling the application itself, as well as "Origination Fees" — paid by the lender to a party that originates your loan, such as a mortgage broker. Points: essentially, a form of prepaid interest. Points are paid at time of the loan to lower the interest rate of the loan. Points may be tax deductible. Underwriting: fees charged by the lender to evaluate loan risks, based on the transaction and the borrowers financial attributes. The Loan Costs section is usually found on Page 2 of the Loan Estimate.

Final mortgage costs may differ from the loan estimate, but the differences are defined by legal tolerances for some cost categories. For items limited to 10% change tolerance — recording-services charges and non-shoppable 3rd-party services — amounts paid over the Loan Estimate for these categories must be refunded. For all other items, including the services which a borrower is allowed to shop, differences between payment and closing, and Loan Estimate, are not refundable. The lender must arrange refunds within 60 calendar days (NOT business days) of loan consummation.

A mortgage Loan Estimate is just that — an estimate. Your actual loan costs might be higher or lower than the estimate, within certain legally-specified limits for some items, and without defined limits for others. Items with a 10% change limit include: Charges for recording services 3rd-party services on the list provided by the lender Items which might change without legally-defined tolerances: Prepaid Interest Property Insurance Premiums Escrow or Reserve Deposits Items with ZERO tolerance, that should not change: Transfer taxes Fees paid to the lender Fees paid to a mortgage broker, or to affiliates of the lender or the broker. Fees paid to any 3rd parties on the "CAN NOT SHOP" list provided on the Loan Estimate. Compare the Loan Estimate and the Closing Disclosure before loan consummation.

Lenders supply a Loan Estimate form for valid mortgage applications. This form documents these essential elements of the approved loan: Services borrowers CAN shop in relation to the loan Services borrowers CANNOT shop Loan terms Loan costs Project payments Cash and costs required to close the loan A loan summary to aid comparing this estimate to other estimates. Loan Estimate forms also provide details about loan assumption policies, appraisal, insurance, late-payment policies, and refinancing. The Estimate should also disclose whether the lender intends to service the loan directly. All Loan Estimates are not identical. Information that is NOT related to a specific application may be excluded. Careful reading and comparison is always a good practice.

For mortgage applications, the term business day is used in setting the period of time lenders have to return 2 key forms that document the loan status. The definition is NOT consistent, though! Loan Estimates, which are a required response for approved loans, are due back to the applicant within 3 business days. In this case, "business day" is every day on which a financial institutions workplaces are open to the general public. If a particular lender is always closed on Thursday, their deadline might be different from that of another lender. Closing Disclosures must be supplied 3 days prior to consummation of the loan, but in this case, "business day" is defined on a common calendar: all calendar days except Federal public holidays, plus Sundays. In short, all lenders work from the same calendar for Closing Disclosures.

If the loan you requested is authorized by the lender, on the terms you asked for, a Loan Estimate must be returned to you in 3 business days. However, if the lender decides that the loan is not approved, they do not need to supply the Loan Estimate form. In addition, if you withdraw the mortgage application within the 3-day period, they do not have to supply the Loan Estimate. Bottom line — if a loan is approved and the lender does not provide the Loan Estimate in 3 business days, the lender is not remaining compliant with TRID Regulation Z.

Once you have supplied these 6 facts to a lender, the clock is started for them to return a Loan Application within 3 business days: Loan Amount Estimated Property Value Property Address Your Name(s) Your Social Security Number(s) Your Income Lenders are free to collect additional information based on their loan application processes, but are not free to change the 3 business day deadline. Once these 6 facts are accepted in an application, lenders are required to respond on time.

By law, a mortgage loan application is valid when these things are provided to the lender: Loan Amount applied for Estimated Property Value Property Address Borrower Name Borrower ID — preferably Social Security Number Borrow Income Supplying these establishes a legitimate loan application under the Federal TRID guidelines. While submitting these in written form is preferable, providing them in conversation — live, phone call, or video conference — is also valid. You should request a written record of the conversation, of course. Once supplied, these 6 facts start the clock for a lender. Under the TRID guidelines, financial institutions must return a Loan Estimate within 3 business days. (See other videos on Loan Estimate details here.)

Laws set under the TILA- RESPA Integrated Disclosure Act - TRID - specify the details that lenders MUST supply to customers making an application for a real estate loan. Since Oct 1, 2015 loan providers are required to return two disclosures - the Loan Estimate and the Closing Disclosure. The Loan Estimate is, as the title suggests, an estimate that covers the key costs, risks and features of the proposed loan. When the lender approves a loan, the Loan Estimate must be returned to the consumer in three business days. (See related Video-Genius video on how business days are defined.) The Closing Disclosure applies if the loan process moves forward. This form covers the key costs of the loan transaction. It must be provide to the borrower a minimum of 3 business days prior to the final loan consummation.