Preliminary Disclosure Definition

Preliminary disclosures are initial disclosures a lender is required to give to a borrower before consummating a transaction secured by the borrower’s principal dwelling. The purpose of the preliminary disclosures is to provide the borrower with information about the terms of the transaction and cost of credit so the borrower can make an informed decision about whether to proceed with the transaction.

Preliminary Disclosure explained

Preliminary disclosures must be provided to the borrower no later than three business days after the lender receives the borrower’s application. The preliminary disclosure must include:

  • an estimate of the required payments under the loan;
  • the amount of points and fees paid by the consumer, expressed as both a percentage of the transaction and in actual dollars; and
  • a good faith estimate of all other settlement costs that must be paid by the consumer at or before closing.

If the interest rate on the loan is variable, the preliminary disclosures must also include:

  • the monthly payment at the time of consummation;
  • the highest monthly payment that could occur during each year of the term of the loan; and
  • the lifetime payment cap.


The preliminary disclosure is an important document that provides borrowers with information about their loan so they can make an informed decision about whether or not to proceed with the transaction. It is important to review this document carefully so you will understand all of the terms and conditions of your loan. If you have any questions, be sure to ask your lender for clarification.

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