September 28, 2015 in Mortgages

Tour the Loan Estimate form for mortgages

When you apply for a mortgage, the lender is required to give you a document called a Loan Estimate.

This slideshow gives a brief tour of the Loan Estimate and shows where you can find the answers to such questions as:

And that’s not all. Let’s begin.

Loan Estimate Guide

Find the estimated monthly mortgage payment on Page 1, in the “Projected Payments” section.

This section shows the total estimated payment. It also divides the mortgage payment into:

Loan Estimate Guide

The loan’s interest rate can be found on Page 1, in the “Loan Terms” section.

This section not only tells you the interest rate, but whether it’s a fixed-rate or adjustable-rate mortgage.

Loan Estimate Guide

You’ll find a summary in the “Costs at Closing” section at the bottom of Page 1.

Page 2 contains a detailed itemization of the closing costs in the “Loan Costs” and “Other Costs” sections.

Don’t confuse the closing costs with “cash to close.” That’s the money that you’ll have to part with at the closing table.

Loan Estimate Guide

The amount of money you pay at the closing table is known as “cash to close.” The Loan Estimate lists the amount at the bottom of Page 1, in the “Costs at Closing” section.

If you want to know how that number was calculated, see the “Calculating Cash to Close” section of Page 2.

Loan Estimate Guide

It’s helpful to lay 2 or more Loan Estimates side by side and compare them page by page. But there’s a shortcut to comparing loan offers: the 5-year cost.

Look at Page 3, the “Comparisons” section. It shows 2 numbers that cut through the clutter when you compare mortgage offers:

The “Comparisons” section has 2 other numbers:

Loan Estimate Guide

The Loan Estimate flags risky loan features. These may include:

Loan Estimate Guide

The Loan Estimate tells you in multiple places whether the loan is an adjustable-rate mortgage, or ARM.

On Page 1, the “Loan Terms” section provides basic information about the ARM’s features:

On Page 2, you will find 2 tables that provide detailed information about the ARM:

Loan Estimate Guide

A rate lock guarantees that the lender will offer you a specific combination of interest rate, points and lender credit for the mortgage. A lock lasts for a limited time, and then it expires.

The Loan Estimate tells you whether the rate has been locked, and for how long. This information is found near the top of Page 1:

To understand more, read “Answers to 5 key mortgage rate-lock questions.”

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Loan Estimate Guide