Which disclosure is mandated by TILA and itemizes potential closing costs for the borrower?

The Loan Estimate is a mandated disclosure under the Truth in Lending Act (TILA) that serves to itemize potential closing costs for borrowers. This document is crucial because it provides borrowers with clear, upfront information about the terms of their loan, including estimated monthly payments, interest rates, and a breakdown of costs. It is designed to help borrowers understand the financial implications of their mortgage and allows for better comparisons between different loan offers.

The Loan Estimate must be provided to consumers within three business days after they submit a loan application, giving them ample time to review and comprehend the costs involved before proceeding with the mortgage process. This advance disclosure not only promotes transparency but also safeguards the borrower's ability to make informed financial decisions.

The other options, while important in the mortgage process, do not specifically itemize potential closing costs in the same manner as the Loan Estimate. For instance, the Settlement Costs and You booklet provides general information about the settlement process but does not detail specific costs related to a particular loan. The Settlement Service Providers disclosure relates to the individuals or companies involved in providing services during the transaction, and the Closing Disclosure is more comprehensive, comparing it to the Loan Estimate rather than focusing solely on potential closing costs before the loan is finalized.