A Loan Estimate is a three-page form that you receive after applying for a mortgage.
It includes important details about the estimated loan amount, monthly payments, interest rate,
and closing costs.
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You should receive a Loan Estimate within 3 business days of applying for a mortgage. The Loan Estimate tells you important details about the loan you have requested.
Lenders are required by law to give you a Loan Estimate for most home loans. The form provides information about the estimated interest rate, monthly payment, and total closing costs for the loan. The Loan Estimate also shows how much you will pay in fees to third parties, such as attorneys and appraisers.
The form has three sections that provide details about the terms of the loan, the interest rate and monthly payments, and the estimated closing costs. The “Loan Terms” section includes information such as the loan amount,down payment amount, repayment schedule, and whether the interest rate is fixed or variable.
The “Interest Rate and Monthly Payments” section includes information about your monthly payments and how they are determined. This section also includes an estimate of your taxes, insurance, and other monthly expenses.
The “Closing Costs” section provides an estimate of all of the fees you will need to pay at closing. These costs can include lender fees, attorney fees, appraisal fees, and title insurance.
When you receive your Loan Estimate form, read it carefully to make sure that all of the information is correct. If any of the information is incorrect, please contact your lender immediately.
What is a Loan Estimate?
A Loan Estimate is a three-page document that you receive from a lender after you submit a loan application. The Loan Estimate tells you important details about the loan you have applied for. It includes information such as the loan amount, interest rate, monthly payment, and closing costs.
The Three-page Loan Estimate
The Three-page Loan Estimate form gives you three important pieces of information:
1. How much the loan will cost you
2. The key features of the loan
3. How to compare different loans
The first page of the Loan Estimate form is about the loan terms and gives you an estimate of the monthly payment. It also shows how much you’ll pay in interest over the life of the loan, and how much you’ll pay in fees at closing.
The second page is called “projected payments” and it shows how your monthly payment may change over time. This can be important if your loan has an adjustable interest rate.
The third page is called “comparisons” and it shows you how this loan compares to other loans that you may be considering. It’s a good idea to shop around for a loan before you decide on one, and this page can help you do that.
The Five Tolerances
The Consumer Financial Protection Bureau (CFPB) is giving you a tool to shop for a mortgage: the Loan Estimate. A Loan Estimate tells you important details about a loan offer, including how much the loan will cost, and helps you compare different loan offers.
The CFPB is also giving you some protections if the final loan terms are different than what was originally offered. These are called “tolerances.” Tolerances give you some flexibility if the cost of your lender’s services increases or decreases, or if other fees vary from their estimates. There are five tolerances:
1)Origination Charges: The total origination charges cannot increase by more than $400, or 10%, whichever is greater. This includes any origination points, application fees, commitment fees, and underwriting fees charged by your lender or broker.
2)Services You Cannot Shop For: If your lender does not allow you to shop for certain services, such as title insurance, then those charges can increase by no more than 10%.
3)Services You Shop For: If you shop for your own services, such as appraisal or home inspection, your lender must give you a credit of at least $50 towards those charges. The credit may be more depending on what services you choose. Additionally, the total of all these credits cannot exceed $1,000.
4)Third-Party Fees: Any third-party fees charged by companies not chosen by you or your lender cannot increase by more than the amount originally estimated. For example, if your appraisal fee was estimated to be $500 and it ends up being $600 because of a scheduler error, then the tolerance does not apply and you would not receive a credit. However, if the appraiser fee was actually $600 because appraisers in your area generally charge that much, then the tolerance does apply and you would receive a credit of at least $50 towards that charge. Additionally, the total of all these credits cannot exceed $1,000.
5)Loan Terms: The interest rate cannot increase after consummation (closing), nor can certain balloon payments be added to the loan if they were not disclosed on the Loan Estimate form.
How to Use the Loan Estimate
You will receive a Loan Estimate if you are approved for a loan. The Loan Estimate provides you with information about the loan you are approved for, including the loan amount, interest rate, monthly payment, and closing costs. This information will help you determine if the loan is right for you.
Comparing Loan Estimates
It’s important to understand that you might receive multiple Loan Estimates if you apply for more than one loan. You can use them to compare the costs of different loans and choose the loan that’s right for you. When you compare Loan Estimates, look at the following items:
-The Annual Percentage Rate (APR)
-The interest rate
-The monthly payment
-The total closing costs
-Whether the loan has a prepayment penalty
At the time you apply for a loan, you should receive from your lender a Loan Estimate form that lists estimates of the all the fees and costs associated with your loan. This three-page form is designed to help you compare different lenders and different loan options. The form includes:
-Loan Terms: The interest rate, monthly payment, and amortization schedule for your loan.
-Projected Payments: Estimated monthly payments for taxes, insurance, and any other required periodic payments. If you are getting a adjustable rate mortgage (ARM), this section will also show the maximum monthly payment during each adjustment period, as well as an estimate of how much your monthly payment could increase or decrease over the life of the loan.
-Costs at Closing: A breakdown of all the one-time fees and charges you will need to pay at closing, including origination fees, discount points, appraisal fee, title insurance, and other closing costs.
-Estimated Taxes & Insurance: An estimate of your property taxes and homeowners insurance premiums. If you are getting a condo or co-op loan, this section will also include condo/coop assessments (if applicable).
A Loan Estimate is a three-page form that you receive after applying for a mortgage. The form provides you with important information, such as the estimated interest rate, monthly payment, and total closing costs for the loan. Here is a list of all the items that appear on a Loan Estimate form.
1. Loan Terms: This section includes information such as the loan amount, interest rate, and monthly payment.
2. Projected Payments: This section includes information on your estimated monthly payments, including principal and interest, taxes and insurance, and any required homeowner’s association dues.
3. Costs at Closing: This section provides an estimate of the closing costs you will need to pay at closing. These costs can include items such as loan origination fees, appraisal fees, and title insurance.
4. Estimated Taxes and Insurance: This section provides an estimate of the annual taxes and insurance premiums you will need to pay as a homeowner.
5. Other Information: This section includes additional information such as whether the interest rate is fixed or adjustable, and if there are any prepayment penalties associated with the loan.