Finance
Under RESPA, the Good Faith Estimate (now Loan Estimate) must be provided to a mortgage applicant within:
A24 hours of application
B3 business days of receiving a complete loan application✓ Correct
C5 calendar days of receiving a complete loan application
D10 days before closing
Explanation
Under RESPA and TRID (TILA-RESPA Integrated Disclosure rules), lenders must provide the Loan Estimate (which replaced the Good Faith Estimate) within 3 business days of receiving a completed loan application. This allows borrowers to compare loan terms from different lenders.
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Key Terms to Know
Loan-to-Value Ratio (LTV)
The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Promissory NoteA written promise to repay a loan under specified terms — the borrower's personal financial obligation in a real estate transaction.
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