What does the Loan Estimate replace for most transactions?

The Loan Estimate is designed to provide borrowers with clear and concise information about the terms of a loan, including estimated monthly payments, fees, and other important loan details. This document replaces the Good Faith Estimate (GFE) and the early Truth in Lending (TIL) Disclosure for most transactions.

The GFE was previously used to give borrowers estimates of the closing costs associated with a mortgage loan, while the early TIL Disclosure provided important information about the costs and terms of the loan, such as APR and finance charges. By combining these two documents into the Loan Estimate, the Consumer Financial Protection Bureau (CFPB) aimed to simplify the information provided to borrowers, making it easier for them to compare loan offers from different lenders.

This change also enhances transparency and helps to foster a better understanding of the loan terms, which is crucial for consumers in making informed decisions about their mortgage options. The other options do not correctly identify the primary function of the Loan Estimate in the context of most transactions.