Understanding Loan Estimates
What is a Loan Estimate?
Your Loan Estimate is critical to the mortgage and home-buying processes, but many buyers do not 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.
Your Loan Estimate gives 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
A Loan Estimate Helps You Shop Around
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 are 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.
If you have questions about Loan Estimates, or about anything related to the home-buying process, fill out the form below, or contact us!
For an in-depth explanation of the entire loan estimate, the CFPB breaks it down in this helpful resource.