What a Loan Estimate is
The Loan Estimate is a federal form that most lenders use in the same format. That makes it easier to compare offers. It's based on the information you shared when you applied, so it can change if your details or the market change before you lock your rate.
Page 1: terms and payments
Page 1 shows your loan amount, interest rate, monthly principal and interest, and whether any of those can increase after closing. It also notes whether there's a prepayment penalty or a balloon payment.
The projected payments table adds estimated taxes, insurance and any mortgage insurance. At the bottom you'll see estimated closing costs and estimated cash to close. Near the top, check whether your rate is locked and until when.
Page 2: closing costs
- Section A: origination charges, which are what the lender charges you
- Section B: services you can't shop for, such as the appraisal and credit report
- Section C: services you can shop for, such as title and settlement
- Section E: taxes and government fees, such as recording fees
- Section F: prepaids, such as prepaid interest and the first year of homeowners insurance
- Section G: your initial escrow deposit
- Section H: other costs, and Section J: total closing costs after any lender credits
Page 3: comparisons
Page 3 shows the APR, which reflects your rate plus certain loan costs, and the total interest percentage, which is how much interest you'd pay over the life of the loan compared with the loan amount. It also lists other considerations, such as whether the lender intends to service your loan.
How to compare two estimates
Use estimates issued on the same day, for the same loan type, term and down payment. Rates move daily, so estimates from different days aren't a fair match.
Focus on Sections A through C. Prepaids and escrow in Sections F and G depend on your closing date, taxes and insurance, not on the lender, so differences there usually don't tell you who's cheaper.
What you'll see with CapCenter
With CapCenter's ZERO Closing Costs (restrictions apply), CapCenter pays or waives the lender and covered third-party fees, often through a lender credit shown on your estimate. Discount points are the one optional cost if you choose to buy down your rate. Prepaids, escrow deposits and some government recording taxes still apply.
