Which Set of Items Appear on a Loan Estimate?
If you’re in the process of applying for a mortgage, you may be wondering which set of items are required to appear on a Loan Estimate. Here’s a quick rundown of what you can expect to see on your Loan Estimate form.
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Mortgage Loan Originators
A Loan Estimate is an estimate of the loan terms a consumer is eligible for based on the information they provide. The Loan Estimate must be provided to the consumer within three days of the mortgage loan originator receiving the consumer’s application. The Loan Estimate must include:
Who is a Mortgage Loan Originator?
A mortgage loan originator (“MLO”) is an individual who, for compensation or gain, takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan. An MLO must have completed at least eight hours of NMLS-approved education. If you have not yet met this requirement, you will see the “Needs VIII Hours” field on the Education page in NMLS.
What Does a Mortgage Loan Originator Do?
A mortgage loan originator is an individual who takes a loan application and helps the borrower choose the best type of financing available. The loan originator will explain the different types of loans available, their terms, and conditions. They will also find the best interest rate and repayment schedule for the borrower.
The role of a mortgage loan originator has changed over the years. In the past, they worked mostly with local banks and credit unions. Today, they work with a variety of lenders, including online lenders. Some mortgage loan originators are even self-employed.
There are two main types of mortgage loan originators:
1) those who work for a specific lender and
2) those who work for a broker.
Mortgage brokers are intermediary agents who work with multiple lenders to find the best loan terms for their clients. They are paid a fee by either the borrower or the lender, or both.
Most mortgage loan originators are required to be licensed by the state in which they work.
Who is Required to Use the Loan Estimate Form?
A Loan Estimate tells you important details about a loan offer. A Loan Estimate is required by law to be provided by a mortgage lender or mortgage broker within three business days of receiving a loan application.
What is a Loan Originator?
A mortgage loan originator is any individual who takes a mortgage loan application or offers or negotiates terms of a mortgage loan for compensation or gain. This includes an employee of a lender as well as independent contractors who are “loan officers” such as mortgage brokers.
Because the Dodd-Frank Wall Street Reform and Consumer Protection Act considers anyone who takes a loan application or offers or negotiates the terms of a residential mortgage loan to be a loan originator, all loan originators must be registered with the Nationwide Mortgage Licensing System and Registry (NMLS).
The Loan Estimate Form
The Loan Estimate form is a three-page document that provides borrowers with important information about their loan. This includes the loan terms, estimated interest rate, monthly payments, and closing costs. The Loan Estimate must be provided to borrowers within three days of applying for a loan.
The Basics of the Loan Estimate Form
The Loan Estimate is a three-page form that you receive after applying for a mortgage. It provides you with important information, including a breakdown of your estimated loan costs and monthly payments. It also gives you information that can help you compare different offers from different lenders.
The Loan Estimate must be given to you within three business days of when you apply for a mortgage. If the loan originator changes any of the terms on the form, they must give you a revised Loan Estimate.
You will also receive a final Loan Estimate before you close on your loan. This form will have updated information about your interest rate, monthly payment, and closing costs. Compare the final Loan Estimate to your original estimate to make sure that the terms have not changed.
There are six sections on the Loan Estimate form:
1)Loan Terms: This section includes information about the type of loan, the interest rate, the monthly payment, and the term (length) of the loan.
2) Projected Payments: This section includes information about your estimated taxes, insurance, and other monthly payments.
3) Costs at Closing: This section includes information about your estimated closing costs, including any origination fees charged by the lender.
4) Estimated Cash to Close: This section tells you how much money you will need to have at closing in order to pay your closing costs and Miscellaneous charges (if applicable).
5) Other Disclosures: This section includes additional information about things like prepayment penalties and appraisal requirements.
6) Comparison of Options: If you are considering more than one loan option from the same lender, this section will help you compare them side-by-side.
The Three Pages of the Loan Estimate Form
The Loan Estimate form has three pages.
The first page includes your personal information, the type of loan you are getting, and estimates for the loan amount, interest rate, and monthly payments. The estimate for monthly payments includes estimates for Principal & Interest, taxes & insurance (PITI), and any required monthly payments for homeowners insurance, flood insurance, mortgage insurance, or association dues.
The second page includes more detailed information about the costs you will pay at closing. This includes estimates for origination charges, third-party service providers, government recording charges, and prepaid items.
The third page includes information about the terms of your loan such as the maturity date, the amortization type, and whether the interest rate is adjustable. It also discloses whether there is a prepayment penalty.
How to Use the Loan Estimate Form
You receive a Loan Estimate when you apply for a mortgage. It gives you important information about the loan you have requested. Use this form to make sure that the loan is right for you and to compare offers from different lenders.
The Loan Estimate form has three parts:
1) Contact Information – This is where you will find the name, address, phone number, and NMLS ID number of your loan officer and mortgage company.
2) Loan Terms – The loan terms section tells you important information about the mortgage loan you have requested. It includes the type of loan, the interest rate, the estimated monthly payment, and how long it will take to pay off the loan.
3) Cost Summary – The cost summary tells you about the estimated closing costs for your mortgage loan. It includes a breakdown of all the fees and charges that you may have to pay at closing.
If you have any questions about the Loan Estimate form, please contact your loan officer or mortgage company.
The Loan Estimate Form in Action
When you apply for a mortgage, the lender must provide you with a Loan Estimate form. This form itemizes the costs associated with getting a mortgage. The Loan Estimate must be provided to you within three business days of when you submit a loan application.
How to Fill Out the Loan Estimate Form
You should receive a Loan Estimate form when you first apply for a mortgage. The form provides you with essential information, including:
-The loan amount
-The interest rate
-The estimated monthly payment
-The estimated closing costs
Here’s a quick overview of how to fill out the Loan Estimate form:
-Loan amount: This is the total amount you’re borrowing from the lender. Make sure this matches the loan amount you agreed to when you applied for the mortgage.
-Interest rate: This is the interest rate on your loan. The higher the interest rate, the more you’ll have to pay each month. Make sure this matches the interest rate you agreed to when you applied for the mortgage.
-Estimated monthly payment: This is an estimate of your monthly payment, based on the information you provided on the form. This includes principal and interest, as well as any estimated taxes and insurance. Make sure this payment is affordable for you before you agree to any loan terms.
-Estimated closing costs: This is an estimate of the fees and costs associated with closing on your mortgage. These can vary significantly from one lender to another, so it’s important to compare these estimates before agreeing to any loan terms.
How to Read the Loan Estimate Form
The Loan Estimate form is intended to simplify the shopping process for home loans by providing consumers with upfront, good-faith estimates of the loan terms describing the anticipated costs. It’s important to remember that the numbers on the Loan Estimate form are only estimates and may not match the actual costs at closing.
The Loan Estimate form is organized into four sections:
Loan Terms: This section includes information about the type of loan, the interest rate and monthly payments.
Projected Payments: This section provides an estimate of your monthly payments, including principal, interest, taxes and insurance (PITI).
Closing Costs: This section provides an estimate of the one-time costs associated with closing on your loan. This can include origination fees, title insurance and other fees charged by your lender or third parties.
Other Costs: This section provides an estimate of any additional costs you may incur, such as for appraisal or flood certification.
How to Compare the Loan Estimate Form to the Closing Disclosure Form
The Loan Estimate form gives you a snapshot of what your loan might cost, but to get the full picture, you need to compare it to the Closing Disclosure Form. The Closing Disclosure Form shows the actual costs of your loan and any changes that may have occurred since you received the Loan Estimate.
//Comparing the two forms can be tricky, but here are a few tips:
//-The forms should have the same Loan ID number. If they don’t, items on one form may not match up correctly with items on the other form.
//-The Closing Disclosure Form will have updated information on interest rates, loan fees, and projected payments. These may be different from what was on the Loan Estimate form.
//-Some items on the forms may be listed in a different order. For example, taxes and insurance may be listed under “Total Estimated Closing Costs” on the Loan Estimate form but under “Other Costs” on the Closing Disclosure Form.
//-The forms may use different terminology for some items. For example, “origination charges” on the Loan Estimate form may be listed as “loan origination fee” on the Closing Disclosure Form
