The Loan Estimate: Where to find answers to your mortgage questions

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Have a question about your loan offer? Tap or click on a question, and the Loan Estimate will light up in the locations where you'll find the answer.

What will my monthly payment be?

This section shows the total estimated payment and also divides the payment into principal and interest, mortgage insurance and escrow (the monthly cost of property taxes and homeowners insurance).

What's the interest rate?

Near the top of Page 1, the "Product" tells you whether it's a fixed-rate or adjustable-rate mortgage. Below that, in the "Loan Terms" section your interest rate is listed.

How much are the closing costs?

A summary of total closing costs is found near the bottom of Page 1, and details are found on the left side of Page 2.

The amount of money you pay at the closing table is known as "cash to close." The bottom-line figure is at the bottom of Page 1. More detail is found at the bottom right of Page 2.

How can I compare loan offers?

Here's a shortcut: The "Comparisons" section on Page 3 describes the total cost of the loan over the first 5 years (the lower, the better), as well as the principal you have paid off in the first 5 years (the higher, the better).

This section also lists the annual percentage rate and total interest percentage. For both, a lower number is better.

Does this loan hide any traps?

In the "Loan Terms" section, if it says "yes," that the monthly principal and interest can change, it means your payments could go up. This probably means it's an adjustable-rate mortgage, which isn't necessarily a trap, but it's important to know.

Directly under that, the document tells you whether the loan has a prepayment penalty or a balloon payment. A prepayment penalty is designed to make it financially painful to refinance. Balloon payments are rare and usually are for rural homes.

Is it an adjustable-rate mortgage?

At the top of Page 1, "Product" tells you whether it's a fixed-rate or an adjustable-rate mortgage. If it says "yes" next to the "Interest rate" line of the "Loan Terms" section, then it's an ARM.

Page 2 has the "Adjustable-Interest Rate (AIR) Table," which gives details of how and when the rate is adjusted. The "Adjustable-Payment (AP) Table" describes maximum and minimum principal-and-interest payments.

Has the interest rate been locked?

A rate lock guarantees that the lender will offer you a specific combination of interest rate and points. It expires after a limited time.


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Claes Bell

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