What is a Loan Estimate?

Your Loan Estimate is critical to the mortgage and homebuying processes, but many buyers don't know why. A Loan Estimate is a multi-page form that details the financial specifics of the loan you requested.

After applying for your mortgage, your lender must provide this Loan Estimate within three business days of receiving your application. This will give you all of the most pertinent information about your loan, so you know exactly what you're getting into.

Your Loan Estimate includes:

• Your estimated interest rate
• Monthly mortgage payments
• Total closing costs
• Estimated costs of taxes and insurance
• Any potential future changes to the interest
• Possible penalties

Shop in Confidence

All lenders are required to use a standard Loan Estimate form with very clear language and layout, so you understand the implications of taking on a loan. If you're shopping different lenders or mortgage options, you can easily compare Loan Estimates and choose the right one for you.

It's important to remember that receiving a Loan Estimate does not mean your lender has approved or denied your loan application. The Loan Estimate details the loan terms your lender expects to offer if you both decide to move forward. Your lender may ask for additional information if you choose to move forward.

If you want to estimate what your monthly mortgage payments may be, use our handy mortgage calculator. Keep in mind, the results of our mortgage calculator are just an estimate. A Loan Estimate will give you all the details you need to know precisely what will happen once you take on a loan.

The Closing Disclosure

Once you've decided on a lender and discussed your loan options, your lender will provide you with a multi-page Closing Disclosure (CD) that elaborates on the final details of the mortgage loan you select. Your lender must provide this Closing Disclosure at least three business days before you close on the mortgage loan.

The CD details the financial specifics involved with your mortgage, including all of the most pertinent information about your loan, so you know exactly what you're getting into before you arrive at the signing appointment.

Your Closing Disclosure includes:

• Your final interest rate
• Monthly mortgage payments
• Total closing costs
• Costs of taxes and insurance
• Any potential future changes to the interest, such as an adjustable-rate
• Any applicable Prepayment penalties

The Final Comparison Tool

All lenders are required to use a standard Closing Disclosure form with very clear language and layout, so you understand the implications of taking on a loan. The CD is formatted similarly to the Loan Estimate you receive during your loan process.

Page 3 of the CD has a comparison section at the top which specifically outlines any changes between your most recent Loan Estimate and the Closing Disclosure. The three-day window between the time you receive your Closing Disclosure and the time you sign your final paperwork is required by law. This allows you time to compare your final loan terms and costs to the estimated ones shown in the Loan Estimate you previously received. The three days also gives you time to ask the lender any questions before you go to the closing table.

Do you have more questions about the homebuying process? We're here to help. Contact us today or fill out the form below to speak to a Mortgage Advisor.