Loan Estimate Explained: What Every Line Means
The Loan Estimate (LE) is a 3-page form you receive within 3 business days of your mortgage application. It shows your estimated loan terms, monthly payment, and closing costs.
What You'll Learn
- Page 1: Loan terms, projected payment, and costs at a glance
- Page 2: Closing costs broken down by category
- Page 3: Comparisons, contact information, and what can/cannot change
- Understanding APR vs. interest rate
- Origination charges vs. third-party fees
The Full Explanation
The Loan Estimate is designed to help you compare offers from different lenders. Understanding what's on it helps you make a more informed decision. CTC Processing ensures all documents tied to the LE are organized correctly for underwriting.
Frequently Asked Questions
What is the difference between the interest rate and APR on my Loan Estimate?
The interest rate is the base cost of borrowing. APR (Annual Percentage Rate) includes the interest rate plus fees (origination, mortgage insurance, some closing costs) expressed as an annual rate. APR is the better comparison tool across lenders.
What costs on my Loan Estimate can change?
Section A (origination charges) cannot change. Section B and C (third-party fees) can change by no more than 10% in aggregate. Section E (prepaids) and Section F (escrow) can change. Your rate is locked when you lock.
When do I receive a Closing Disclosure vs. a Loan Estimate?
The Loan Estimate comes within 3 business days of application. The Closing Disclosure comes at least 3 business days before closing and shows final, actual costs. Compare both carefully.