Which document ensures borrowers are informed about the costs associated with their loans?

The Loan Estimate is a crucial document designed to provide borrowers with clear information about the costs associated with their loans. It outlines key details, such as the estimated monthly payments, interest rates, closing costs, and other fees. By receiving this document early in the loan application process, borrowers can effectively compare different loan offers and assess their affordability. This transparency helps consumers make informed decisions about their borrowing options.

While other documents play important roles in the lending process, the Loan Estimate specifically targets the initial disclosure of costs, making it vital for understanding the financial commitment involved in a loan. The Closing Disclosure, for instance, provides final details about the costs before settlement, yet it comes later in the process. The Truth in Lending Disclosure offers comprehensive information about the cost of credit, but it does not necessarily consolidate the estimates in the way that a Loan Estimate does. The Consumer Guide, on the other hand, is more of an informational document rather than a detailed breakdown of loan costs. Therefore, the Loan Estimate stands out as the document that ensures borrowers are informed about the costs associated with their loans right from the beginning.