Faqs About The Loan Estimate In The Homebuying Process
As you near closing on your new home, you will receive a lot of documentation regarding the purchase. One document you should receive is the loan estimate. If you do not receive the estimate, you might have to reconsider your decision to move forward with the purchase. If you are nearing closing, here is what you need to know about the loan estimate.
What Is the Loan Estimate?
The loan estimate is basically a document that details the estimated cost of your loan. The document is divided into sections that you need to understand before proceeding with the purchase of the home.
The loan estimate explains the purpose of the document and why it is important to the purchase of the home. In addition to this information, it also provides you with details regarding the loan for the home, such as the amount of the loan and what you are expected to pay each month.
The document also details what penalties you could face if you fail to make payments on time. If the lender plans to use an escrow account to hold funds collected from you for the insurance and taxes, the specifics of it should be included.
What Can You do With the Loan Estimate?
The loan estimate is more than just a way for you to determine whether or not you can afford the home you are planning to purchase. It can be a handy tool you can use to compare other loan offers you have received. It can sometimes be challenging to compare loans unless you have a solid estimate of what you can expect to pay.
The loan estimate also helps you understand the services you can and cannot shop for in the process of buying the home. For instance, your lender could restrict or allow you to shop for services, such as the home inspection and appraisal without its approval.
What If You Do Not Receive the Loan Estimate?
If you do not receive the loan estimate, you need to contact the lender and request that it is re-sent. It is important to note that if the lender determined that you were not eligible for a loan, it is not required to complete the loan estimate.
In the event that you still do not receive the loan estimate, you can choose to switch to another lender or file a complaint with the Consumer Financial Protection Bureau. The agency will contact the lender on your behalf and work to receive a copy of the loan estimate for you.
Consult with your real estate agent to learn more about the loan estimate and to find out what other disclosures you are entitled to regarding your new home.