Which document is prepared for borrowers to outline the estimated costs associated with a mortgage loan?

The document that outlines the estimated costs associated with a mortgage loan is known as the loan estimate. This document is provided to borrowers within three business days after they submit a loan application. It gives a detailed breakdown of the expected costs of obtaining the loan, including the interest rate, monthly payment, closing costs, and any other fees associated with the mortgage. The purpose of the loan estimate is to help borrowers understand their potential financial obligations and compare them with other loan offers, facilitating informed decision-making.

The closing disclosure, while also related to the costs of a mortgage, is provided later in the process, generally just before closing, and it reflects the final terms of the loan and the actual costs. The loan commitment is a lender's acceptance to provide the mortgage under certain conditions but does not detail costs. The good faith estimate, although similar, has been largely replaced by the loan estimate in the context of federal regulation and uniformity in mortgage disclosures. Thus, the loan estimate is the most accurate and relevant document for outlining estimated mortgage costs at the time of application.