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Understand your mortgage before you commit

How do I read a Loan Estimate?

A Loan Estimate is a standard three-page form that lenders must send within three business days of receiving your application. Because every lender uses the same form, it is the easiest way to compare offers.

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Reviewed by Brian Lehmann, NMLS #369470, loan officer since 2010 · Updated

Four things to check

What decides what a loan really costs

Before you sign anything, Brian walks you through these four things. If you already have a Loan Estimate from another lender, bring it. He'll go through that one with you too.

  1. Your rate

    The interest rate, any discount points you are paying for it, and whether it is locked and until when.

  2. Your estimated payment

    Principal and interest plus property taxes, homeowners and wind insurance, and mortgage insurance when it applies.

  3. Your closing costs

    Which charges come from the lender, which are services you can shop for, and which are prepaid taxes and insurance.

  4. Your Loan Estimate

    The three-page form every lender must give you, read line by line so you can compare offers fairly.

Page by page

What each page of the Loan Estimate shows

Loan EstimatePage 1 of 3

Your loan at a glance

Rate lock
Near the top. "No" means your rate can still change before closing.
Loan terms
Loan amount, interest rate, and monthly principal and interest, and whether any can increase after closing.
Projected payments
Your estimated total monthly payment, including mortgage insurance and escrow for taxes and insurance.
Costs at closing
Estimated closing costs and the cash you will need to close.
Loan EstimatePage 2 of 3

Where the closing costs come from

Section A
Origination charges: what the lender charges, including any points. The clearest line for comparing lenders.
Sections B and C
Third-party services. You can shop for the ones in C, such as title services.
Sections E to G
Taxes and government fees, prepaid interest and insurance, and the initial deposit to your escrow account.
Cash to close
Brings it together with your down payment, deposit, and any seller credits.
Loan EstimatePage 3 of 3

How to compare offers

In 5 years
What you will have paid in total and how much principal you will have paid off.
APR
Your yearly cost of borrowing, including fees, so offers with different fees can be compared.
TIP
Total interest percentage: the interest you pay over the full loan, as a share of the loan amount.
Other considerations
Appraisal, assumption, homeowners insurance, late payment, refinance, and servicing.

The Consumer Financial Protection Bureau encourages borrowers to compare Loan Estimates from more than one lender. Request them on the same day, since rates change daily. Have one already? Text Brian and he'll send a secure way to share it; please don't text or email the document itself. Read the CFPB's Loan Estimate guide

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Questions people ask

Loan Estimate FAQ

How do I read a Loan Estimate?

A Loan Estimate is a standard three-page form lenders must send within three business days of receiving your application. Page 1 shows the loan terms, projected payments, and cash to close. Page 2 breaks down closing costs by section. Page 3 shows the APR, total interest percentage, and what you will have paid in five years, so offers can be compared.

Which part of a Loan Estimate is best for comparing lenders?

Section A on page 2, Origination Charges, shows what the lender itself charges, including any points. Compare it alongside the interest rate on page 1 and the APR on page 3.

Can a loan officer review a Loan Estimate from another lender?

Yes. Text Brian and he'll send a secure way to share it, then go through it line by line with you. Please don't text or email the document itself.

Want help comparing offers?

Talk with Brian about the rate, closing costs, and cash to close on each offer before you choose.

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Or call (251) 616-0005 · text Brian

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