The CFPB recently updated the TRID rule FAQs to address questions about providing a Loan Estimate to consumers. The FAQs mostly confirm guidance previously provided by the CFPB in various forms.
The FAQs focus on the obligation of a creditor to issue a Loan Estimate once the consumer submits the six items of information specified in the definition of “application” applicable to the TRID rule. The six items are the consumer’s name, income and social security number (to obtain a credit report), the property’s address, an estimate of property’s value and the loan amount sought. One FAQ reflects the CFPB’s view that even if the consumer does not intend to apply for a mortgage loan, the submission by the consumer of the six items of information triggers the obligation of a creditor to issue a Loan Estimate:
Is the requirement to provide a Loan Estimate triggered if the consumer submits the six pieces of information in order to receive a pre-approval or pre-qualification letter?
Yes. If a consumer submits the six pieces of information that constitute an application for purposes of the TRID Rule to obtain a pre-approval or pre-qualification letter for a mortgage loan subject to the TRID Rule, the creditor is responsible for ensuring that a Loan Estimate is provided to the consumer within three business days of receipt of the last of the six pieces of information. 12 CFR §1026.19(e)(1)(iii). See comment 2(a)(3)-1. The fact that a consumer submits the six pieces of information to obtain the pre-approval or the pre-qualification letter does not change the obligation to ensure a Loan Estimate is provided. The consumer has submitted the six pieces of information that constitute an application for purposes of the TRID Rule and, thus, the requirement to provide the Loan Estimate has been triggered.
Consumers can be surprised, or even annoyed, when they are not ready to submit an application to a creditor, and then receive a Loan Estimate from the creditor. Creditors should have policies and procedures in place to advise consumers that the creditor must issue a Loan Estimate if the consumer submits the six items of information.
DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
Getting a mortgage can seem complicated, with piles of paperwork to fill out before you can even get an estimate of your loan costs. But it doesn’t have to be so complex – you only need to provide 6 key pieces of information to get the ball rolling.
In this article, we’ll break down exactly what information you need to provide to get a Loan Estimate, the first document you’ll receive when applying for a mortgage. Understanding these 6 pieces can simplify the process and help you shop for the best loan for your needs.
What is a Loan Estimate?
Before we dive into what information you need to provide, let’s quickly cover what a Loan Estimate is
The Loan Estimate is a form provided to mortgage applicants within 3 business days of submitting an application. It details important information about the loan you are applying for, including:
- Estimated interest rate
- Monthly payment amounts
- Closing costs
- Other fees and costs associated with the loan
The Loan Estimate helps you compare loan offers from different lenders, since it presents costs in a standardized format.
Once you formally apply for a loan, the Loan Estimate locks in many of the costs for that specific loan offer for at least 10 business days. This allows you time to review and compare multiple Loan Estimates without worrying that the costs will change.
Now that you understand what the Loan Estimate is, let’s look at what information you need to provide to get this important document.
The 6 Pieces of Information Needed for a Loan Estimate
To receive a Loan Estimate, you need to submit only six key pieces of information
- Your name
- Your income
- Your Social Security number
- The property address
- An estimate of the property’s value
- The loan amount sought
That’s it! Providing just these six pieces of information is enough to trigger the lender’s responsibility to issue you a Loan Estimate within 3 business days.
Let’s look at each of these six items in more detail:
1. Your Name
This one is simple – you just need to provide your full legal name. If you’re applying for a loan with a spouse or partner, provide both your names.
2. Your Income
The lender needs to know your income to determine the loan amount you qualify for. Be prepared to provide your gross annual income from all sources, such as:
- Employment wages
- Self-employment income
- Retirement/pensions
- Social Security
- Any other income sources
3. Your Social Security Number
Your Social Security number allows the lender to pull your credit report, which provides information about your credit history. Good credit is key for qualifying for the best mortgage rates, so the lender needs your Social Security number early in the process.
4. The Property Address
The lender needs to know the address of the property you want to purchase or refinance with the loan. For a purchase, you can provide just the street address even if you don’t have all the details yet.
For a refinance, supply the full address of your current home.
5. Estimate of the Property’s Value
For a home purchase, the lender requires an estimate of the home’s market value to begin the underwriting process. This doesn’t need to be a formal appraisal yet – your real estate agent can provide a reasonable estimate based on comparable home sales and the listing price.
For a refinance, you can give your best estimate of the current market value of your home.
6. Loan Amount Sought
Finally, the lender needs to know how much you want to borrow. This helps tailor the Loan Estimate details to your specific loan needs.
Provide your desired loan amount, keeping monthly payments and your budget in mind. The lender will verify during underwriting that the amount fits within your debt-to-income qualifications.
And that’s it – just six pieces of information to trigger a Loan Estimate! While the full loan application requires more details, providing these key items early gives you critical information to compare loan offers in an efficient manner.
You Cannot Be Required to Provide More for a Loan Estimate
Importantly, under consumer financial protection laws, providing additional information or documents cannot be required just to issue a Loan Estimate. Some key points:
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The lender cannot ask for anything more than the six pieces outlined above before providing a Loan Estimate.
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You cannot be required to submit verifying documents like pay stubs or bank statements prior to getting a Loan Estimate.
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Lenders cannot refuse to accept an application and issue a Loan Estimate if you provide just the six pieces of information.
Of course, more documentation is required later in the full underwriting process. But the law protects your right to receive an initial Loan Estimate upon submitting those key six pieces.
This standardized application process allows you to easily obtain Loan Estimates from multiple lenders to find your best mortgage option.
Pre-Approval and Pre-Qualification Letters
Many lenders also offer pre-approval or pre-qualification letters prior to formally applying. These give you an early estimate of the loan amount and rates you may qualify for.
Importantly, if you provide all six pieces of the above information for a pre-approval letter, the lender is still required to issue a Loan Estimate within 3 business days.
The Loan Estimate provides more detailed cost estimates than a pre-approval letter. So even if you only want a pre-approval initially, be prepared to receive a Loan Estimate if you supply all six pieces of information.
Shop with Confidence
Armed with these six pieces of information, you can now confidently apply for Loan Estimates from multiple lenders. The Loan Estimate makes it easy to compare interest rates, fees, costs and other key factors to find your best mortgage.
While the full loan application requires more time and documentation, getting Loan Estimates upfront helps you shop the mortgage market while protecting your credit. Each lender only needs to pull your credit report once finalizing the full application.
So shop with confidence, knowing you need just six pieces of information to take the critical first step towards your new mortgage. Compare Loan Estimates and get pre-approved with various lenders before selecting the mortgage that best fits your financial situation.
Did you just take a mortgage loan application? Taking 6 pieces of info requires a license
FAQ
What are the six pieces of information for a loan estimate?
What are the 6 pieces of information for Trid?
What 6 pieces of information make a Trid loan application?
constitutes a valid loan application under the TRID rule. You may apply and submit these in writing OR in oral form; a live conversation, or a phone call, backed by a written record of the conversation is a legitimate application.
What are the six items on a home loan?
The six items are the consumer’s name, income and social security number (to obtain a credit report), the property’s address, an estimate of property’s value and the loan amount sought.
What information is required for a loan estimate?
Here’s a breakdown of the six required pieces of information. Required Information to trigger a Loan Estimate: (1) The consumer’s name (2) The consumer’s income (3) The consumer’s Social Security number to obtain a credit report (or other unique identifier if the consumer has no Social Security number) (4) The property address
What topics are covered in a loan application?
The topics covered include: (1) the receipt of an application, (2) whether new disclosures will be required for assumptions, (3) record retention, (4) the tolerance applicable to owner’s title insurance, and (5) the timing for the initial and revised Loan Estimates. The Receipt of an Application
Do I need to provide additional information to get a loan?
the desired loan amount. Lenders cannot require you to provide additional information. For example, you do not have to provide a home purchase agreement or documents verifying your income in order to get a Loan Estimate. However, it’s often a good idea to share more information if you have it.
How do I apply for a mortgage loan?
CFPB RESPA/TILA Rule Reference: 6.5, page 30, CFPB Detailed summary of the rule To be considered a true application for a mortgage loan, a borrower must submit six key pieces of information to their potential creditor either written or electronically. If the borrower orally provides this information, there must be a written record of that event.