Oregon 30-Hour Real Estate Law Practice Test

What is one purpose of the Loan Estimate provided to a buyer?

1. To explain the mortgage rates

2. To provide the estimated closing costs

3. To outline the property details

4. To set the closing date

The correct answer is: To provide the estimated closing costs

The Loan Estimate serves a crucial purpose by providing the estimated closing costs to the buyer. This document is designed to give borrowers a clear understanding of the costs associated with their mortgage before they proceed with the loan. By outlining the estimated closing costs, the Loan Estimate allows buyers to anticipate their financial responsibilities, compare offers from different lenders, and make informed decisions. This transparency is vital as it helps avoid any surprises at closing and ensures that buyers are fully aware of the financial implications associated with their loan. The focus on estimated closing costs also aligns with the broader goal of the Loan Estimate, which is to promote clarity and comparability among different loan options for consumers. Other components like mortgage rates and property details, while important, do not capture the primary function of the Loan Estimate in aiding buyers to anticipate and plan for their financial commitments during the closing process.