Understanding Your Loan Estimate: A Line-by-Line Breakdown
The Loan Estimate is a standardized three-page form lenders are required to provide within three business days of receiving a mortgage application. Its entire purpose is comparability — every lender's Loan Estimate uses the same layout, so offers can be compared side by side without needing to decode different formats. Page 1: The basics The first page shows the loan amount, interest rate, and estimated monthly payment, along with whether the rate and payment can change over time (relevant for ARMs or loans with balloon payments). It also includes an estimate of cash needed to close. This page is designed to be skimmed quickly for the headline numbers. Page 2: Closing cost details This is where the real comparison shopping happens. Costs are split into categories: Loan costs — origination charges, application fees, and services the buyer can't shop separately for (like the appraisal in most cases) Services you can shop for — title services, pest inspections, and s...