The short version
The Loan Estimate is the federal standard form for most home loans. It arrives shortly after you apply, and it sets out the loan's terms, its projected payments and its itemized costs.
It commits you to nothing. Until you've received it and said you intend to go ahead, the only fee that can be charged is for a credit report.
What's on it
The costs are itemized in groups.
- Origination charges
- Services you can't shop for
- Services you can shop for
- Taxes and other government fees
- Prepaid items and the initial escrow deposit
- Other costs
- Lender credits
Reading the costs
Read the costs section by section: what the lender charges, what third parties charge, what you can shop for, and what's prepaid.
Points and lender credits move cost between closing and the rate. Discount points are paid at closing in exchange for a lower rate. A lender credit covers some costs at closing in exchange for a higher one. Neither makes the cost go away.
Comparing two estimates
The rate isn't the whole comparison. Look at the origination charges, points and lender credits too.
Compare estimates for the same loan amount and program, issued close together. Two estimates built on different assumptions can't be compared line for line.
If you already have a Loan Estimate, I can go through it with you section by section.
When there isn't a Loan Estimate
Lines of credit, and some investment-property loans made for business purposes, come with different disclosures. Ask what you'll receive.
Put two estimates side by side.
Enter each estimate's interest rate, not its APR, as Option 1 and Option 2 for the same home, then use Comparison on the Payment tab to see them side by side. Any starting rate shown is a conventional average: replace it with each estimate's own rate, and set each option's loan type and term to match its estimate. The calculator doesn't rank them. Comparison shows the monthly side. The origination charges, points and credits are compared on the estimates themselves. For a refinance estimate, use the Refinance tab.
Questions? Ask Joe
How this applies to your situation is something I can go through with you personally, as a licensed loan officer. Florida (561) 320-2211 or Georgia (678) 289-6600, call or text. Or email info@homeexpress.com.