What is required from lenders under RESPA?

Lenders are required under the Real Estate Settlement Procedures Act (RESPA) to provide a Loan Estimate of settlement costs within three business days after receiving a loan application. This requirement is crucial because it ensures that borrowers have the necessary information to understand the terms and costs associated with their mortgage before they make a commitment. The Loan Estimate breaks down the estimated closing costs, interest rate, monthly payments, and other significant fees, allowing for transparency and comparison between different lenders.

The timely provision of this information is essential for protecting consumers and facilitating informed decision-making as they navigate the complexities of the home financing process. By setting a standard timeframe for lenders, RESPA aims to prevent surprises at closing and promote fair lending practices.