What is the 'know before you owe' rule?

What is the 'know before you owe' rule?

• A. TRID, integrated TIL and GFE, creates the Loan Estimate and Closing Disclosure.
• B. The rule to pre-approve borrowers
• C. The policy requiring lenders to reveal credit scores
• D. The requirement to disclose APR at closing

Answer: (A)

Know Before You Owe is about giving borrowers clear, timely, and standardized disclosures so they can compare loan terms and understand the true costs up front. The best answer reflects that TRID merged the old Truth in Lending disclosures with the Good Faith Estimate into two new forms—the Loan Estimate and the Closing Disclosure—so consumers see an early estimate of loan terms and costs and a final, accurate accounting before closing. This setup makes costs easier to compare and helps avoid surprises at closing. The Loan Estimate is provided within three business days of application, and the Closing Disclosure must be received at least three business days before closing, with any changes triggering new disclosures. The other choices describe related concepts (pre-approval, credit-score disclosures, APR timing) but they don’t capture the core idea of the Know Before You Owe rule, which is the TRID-driven two-form system that standardizes and timing-aligns loan disclosures.

Know Before You Owe is about giving borrowers clear, timely, and standardized disclosures so they can compare loan terms and understand the true costs up front. The best answer reflects that TRID merged the old Truth in Lending disclosures with the Good Faith Estimate into two new forms—the Loan Estimate and the Closing Disclosure—so consumers see an early estimate of loan terms and costs and a final, accurate accounting before closing. This setup makes costs easier to compare and helps avoid surprises at closing. The Loan Estimate is provided within three business days of application, and the Closing Disclosure must be received at least three business days before closing, with any changes triggering new disclosures. The other choices describe related concepts (pre-approval, credit-score disclosures, APR timing) but they don’t capture the core idea of the Know Before You Owe rule, which is the TRID-driven two-form system that standardizes and timing-aligns loan disclosures.