The Loan Estimate, line by line
The Loan Estimate is the standardized three page form every lender must send within three business days of a mortgage application. This reference covers it line by line: what each item means, who actually sets it, and whether it can change before closing. It is written to be kept open next to your own document.
Page 1: Loan terms and the Rate Lock box
Set by the lender. The rate floats unless locked.
Loan amount. The principal you are borrowing.
Interest rate. The note rate; see the Rate Lock box before trusting it.
Monthly principal and interest. The payment before taxes and insurance.
Prepayment penalty and balloon payment. Should say NO for most loans; a YES deserves a question.
Projected payments. Principal and interest, mortgage insurance, and escrow estimates combined.
Costs at closing. The summary figures detailed on page 2.
Rate Lock box. YES means your pricing is set and the date shown is when the lock expires, not when you were priced; NO means the rate moves with the market until you lock.
Section A: Origination charges
Set by the lender. Held to strict tolerance after intent to proceed.
Origination fee. The lender's charge for making the loan.
Points. One point is one percent of the loan amount, a cost paid once to lower the rate.
Underwriting and processing. The lender's internal work, named as fees.
Application fee. Same category.
Note: This section is the price of the loan itself and generally cannot increase at closing once you indicate intent to proceed.
Section B: Services you cannot shop for
Third party prices, chosen by the lender. Limited tolerance.
Appraisal. The valuation the lender requires.
Credit report. The tri merge pull.
Flood determination and tax service. Small compliance checks.
Section C: Services you can shop for
Your choice of provider. Shopping can genuinely save here.
Title services and lender's title insurance. Protects the lender's lien; priced by title companies, which compete.
Settlement or closing agent. Runs the closing.
Survey and pest inspection. Where required.
Section E: Taxes and government fees
Set by your state and county.
Recording fees. The county's charge to record the deed and mortgage.
Transfer taxes. State or local tax on the transaction; who customarily pays varies by state.
Sections F and G: Prepaids and escrow
Your own money, positioned for your first year. Not a fee.
Prepaid interest. Interest from closing day to your first payment cycle.
Homeowners insurance premium. The first year, paid up front.
Escrow deposits. Months of taxes and insurance banked so the account can pay bills when due.
Note: Estimates here get replaced by real bills late in the process, which is where most “my closing costs went up” surprises live.
Section H: Other
Mixed. Read each line.
Owner's title insurance. Protects your equity, often marked optional; a decision, not a default.
Anything else. That fits nowhere above.
Page 3: Comparisons and considerations
Standardized yardsticks for comparing offers.
In 5 years. Total paid and principal retired after five years; compare across offers.
APR. The rate and the fees folded into one figure, useful for comparing two offers side by side.
TIP. Total interest percentage over the loan's life.
Other considerations. Appraisal rights, assumption, late payment terms, servicing intentions.
Common questions
Is the Loan Estimate a commitment?
No. It is a standardized offer, and the lender must stand behind it for 10 business days.
Which numbers on it matter most?
The rate, the Section A total, and the Rate Lock box. Those three carry the price of the loan itself.
What is the difference between the Loan Estimate and the Closing Disclosure?
The estimate is the offer at application; the disclosure is the final accounting, delivered at least three business days before closing, in the same format so lines can be compared one to one.
Built by LoanInspection, which grades uploaded Loan Estimates against public federal data.