Oregon 30-Hour Real Estate Law Practice Test

Which document outlines the estimated costs associated with the loan?

1. Loan Estimate

2. Purchase agreement

3. Mortgage note

4. Title policy

The correct answer is: Loan Estimate

The Loan Estimate is the document that outlines the estimated costs associated with a loan. This standardized form provides borrowers with essential details about the terms of their mortgage, including the estimated interest rate, monthly payment, and any associated fees or costs before closing. The Loan Estimate is designed to help borrowers understand the total costs of the loan so they can make informed decisions. It includes a breakdown of costs such as origination fees, appraisal fees, and other closing costs, ensuring that the borrower is fully aware of what to expect financially before committing to the mortgage. In contrast, the purchase agreement is a contract between a buyer and seller regarding the sale of a property, which does not specifically detail loan costs. The mortgage note is the legal document that borrows the promise to repay the loan, while the title policy provides information regarding the insurance of the title against defects but does not contain loan cost breakdowns. Thus, the Loan Estimate is the only document specifically focused on providing estimated loan costs.