Loan Officer Practice Exam

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What is the primary purpose of the Loan Estimate as mandated by TRID?

To provide an official mortgage application
To inform borrowers of estimated loan costs
To consolidate special disclosures into a single document
To outline the legal terms of a mortgage agreement

The correct answer is: To inform borrowers of estimated loan costs

The primary purpose of the Loan Estimate, as mandated by the TILA-RESPA Integrated Disclosure (TRID) rule, is to inform borrowers of estimated loan costs. The Loan Estimate provides a summary of key information about the mortgage loan, such as the estimated monthly payments, interest rates, and other costs associated with obtaining the loan. This transparency enables borrowers to make informed decisions and compare loan offers from different lenders. By delivering this critical information upfront, the Loan Estimate helps to protect consumers from unexpected or hidden fees, ensuring that they understand the financial implications of their mortgage before proceeding. The tool thus serves an essential function in promoting clarity and enabling potential borrowers to engage more fully in the loan process.