What information must be included in the Loan Estimate given to borrowers?

The Loan Estimate is a critical document provided to borrowers that outlines essential details regarding the mortgage loan they are considering. The correct choice focuses on the requirement for this document to include estimated closing costs and loan terms. This encompasses not only the interest rate but also other costs associated with closing on the loan, such as origination charges, third-party services, and prepayments. Additionally, the Loan Estimate must outline the specifics of the loan terms, including the loan amount, the interest rate, the monthly payment, and the length of time the borrower will need to pay back the loan.

The inclusion of estimated closing costs and loan terms is fundamental because it allows borrowers to understand the overall financial obligations they will assume and facilitates better comparisons between different loan offers. By providing this comprehensive view, the Loan Estimate helps borrowers make informed decisions about their mortgage options.

Other options, while potentially relevant to the overall cost of homeownership, are not explicitly required to be included in the Loan Estimate. Homeowner's insurance deductions and property taxes are secondary considerations that may impact overall monthly payments but are not part of the core information the Loan Estimate needs to convey to ensure compliance with mortgage disclosure laws.