Loan Estimate reader
A sample Loan Estimate, page by page. Select a part to see what it means and what to compare.
Loan Estimate reader
This sample Loan Estimate uses fictional numbers. Tap any section to see what it means and what to check.
Page 1: the loan at a glance
Loan termsLoan $285,000. Rate 6.750%. Principal and interest $1,848.50
What it is. The loan amount, interest rate and monthly principal and interest, and whether any of them can go up after closing.
What to check. Every "Can this amount increase after closing?" answer should be NO on a fixed-rate loan. Check for a prepayment penalty or balloon payment. Both should be NO for most home loans.
Projected paymentsEstimated total monthly payment $2,185
What it is. Your payment over time: principal and interest, mortgage insurance, and estimated escrow for taxes and insurance. Columns change when mortgage insurance ends.
What to check. Make sure taxes and insurance are realistic for the property. In Southwest Colorado, acreage and wildfire areas can make insurance much higher than a default estimate.
Costs at closingClosing costs $8,584. Cash to close $17,584
What it is. The two numbers most people look at first: total closing costs and the cash you need to bring.
What to check. Cash to close includes your down payment and subtracts credits. Compare it with your savings, and keep reserves for after closing.
Page 2: closing cost details
A. Origination charges$995
What it is. What the lender (and broker) charge to make the loan, including any points you pay to lower the rate.
What to check. This is the section to compare between lenders. Points here should match the rate on page 1. These fees cannot increase at closing (zero tolerance).
B. Services you cannot shop for$1,042
What it is. Services the lender chooses: appraisal, credit report, flood determination, tax service.
What to check. These cannot increase at closing if the lender chose the provider (zero tolerance).
C. Services you can shop for$1,450
What it is. Mostly title and settlement services. You can choose your own provider.
What to check. If you choose a provider from the lender's list, these together can rise at most 10%. If you choose your own, there is no limit.
E. Taxes and other government fees$175
What it is. Recording fees and transfer taxes.
What to check. Recording fees count toward the 10% group, and transfer taxes cannot increase.
F. Prepaids$2,243
What it is. Your own costs paid ahead: the first year of homeowners insurance and interest from closing to the end of that month.
What to check. These are not fees to the lender, and they are about the same wherever you borrow. A later closing date in the month means less prepaid interest.
G. Initial escrow payment$483
What it is. A starting balance for your escrow account, so taxes and insurance can be paid when due.
What to check. This is usually about two months of each. Federal rules cap the cushion.
H. Other$2,196
What it is. Items such as an owner's title policy or HOA transfer fees.
What to check. Ask who usually pays these in your area. In Colorado the seller often pays for the owner's title policy.
Calculating cash to closeDown payment $15,000. Deposit −$3,000. Seller credits −$3,000
What it is. How the closing costs, down payment, earnest money and credits add up to the cash you bring.
What to check. Your earnest money deposit and any seller credit should show here as subtractions.
Page 3: comparisons and fine print
In 5 yearsTotal paid $120,097. Principal paid off $17,454
What it is. What you will have paid in principal, interest, mortgage insurance and loan costs over the first five years, and how much principal that pays off.
What to check. This is a useful number to compare between offers, since most people sell or refinance within several years.
Annual percentage rate (APR)7.157%
What it is. Your cost over the full term as a yearly rate, including some fees and points.
What to check. Compare APRs on loans with the same term. The APR is not your note rate; your payment comes from the rate on page 1.
Total interest percentage (TIP)133.5%
What it is. Total interest over the life of the loan as a percentage of the loan amount.
What to check. It is higher on longer terms and higher rates, which makes it useful for comparing a 30-year loan with a 15-year loan.
Other considerationsAppraisal, assumption, homeowner's insurance, late payment, servicing
What it is. Notices about the appraisal, whether someone could take over the loan later, late fees and who services the loan.
What to check. Note the late fee and grace period. VA, FHA and USDA loans are often assumable; most conventional loans are not.
Lenders must give you a Loan Estimate within 3 business days of your application. Compare offers from the same day, for the same loan type and lock period. Section D adds A, B and C; section I adds E through H; J is the total.
How to use it
Every lender uses the same Loan Estimate form, so the same line means the same thing on each. Compare sections A, B and C between lenders; the rest depends mostly on the home and the closing date. To put two side by side, use compare two Loan Estimates.
Learn more
See it with your own numbers
Daniel builds your Mortgage Plan from what you tell him: every loan option that fits, side by side.