How to Read Your Loan Estimate

Page 1: Loan Terms, Projected Payments, and Costs at Closing

The top of Page 1 contains the most important numbers in your entire mortgage transaction. Start here. The Loan Terms box shows your loan amount, interest rate, monthly principal and interest payment, and whether any of these can increase. If the 'Can this amount increase after closing?' column shows 'YES' next to your interest rate, you have an adjustable-rate mortgage — make sure you understood that when you applied.

The Projected Payments table breaks your monthly payment into principal and interest, mortgage insurance, and estimated escrow (taxes and insurance). Lenders are required to show you projections across the life of the loan, so you can see how your payment changes if mortgage insurance drops off. Verify that the escrow estimate is realistic — compare it against your actual property tax bill and homeowner's insurance quote.

Costs at Closing summarizes two numbers: Closing Costs (what you pay in fees and prepaid items) and Cash to Close (the total amount you need to bring to the table, after your down payment and any lender credits). These are estimates at this stage. Your Closing Disclosure, issued three days before you sign, will show the final numbers.

Page 2: Loan Costs and Other Costs

Page 2 is where lenders often bury overcharges, and it is worth reading every line. The page is divided into Loan Costs (fees related to getting the mortgage) and Other Costs (taxes, government fees, prepaids, and escrow setup).

Section A — Origination Charges — lists every fee your lender is charging directly. This includes origination fees, underwriting fees, application fees, and discount points. These are fully negotiable and completely within the lender's control. If you see a 0.25% origination fee plus a $995 underwriting fee plus a $495 processing fee, those are three separate profit items, not three separate services.

Section B — Services You Cannot Shop For — covers required third-party services where your lender selected the provider. Appraisal, credit report, and flood certification typically fall here. These cannot increase by more than 10% between your Loan Estimate and your Closing Disclosure.

Section C — Services You Can Shop For — is your opportunity to save money. Title insurance, settlement agent fees, and sometimes the attorney fee appear here. Your lender must give you a list of approved providers. You can and should get competing quotes from those providers. In most states, title insurance premiums are either state-regulated or genuinely negotiable.

• Section A (Origination): fully negotiable, ask for itemization
• Section B (Can't-shop): locked within 10% of LE estimate
• Section C (Can-shop): get at least two quotes from the provider list
• Other Costs E–H: taxes and government fees are fixed, prepaids depend on your close date

Page 3: Comparisons, Other Considerations, and Contact Info

Page 3 is the most underread page on the Loan Estimate, and it contains some of the most useful disclosures. The Comparisons table shows your Annual Percentage Rate (APR), Total Interest Percentage (TIP), and the amount you would pay in principal, interest, mortgage insurance, and loan costs over five years. Use the APR — not just the interest rate — to compare offers from different lenders, because APR factors in lender fees.

The Total Interest Percentage is a striking number: it shows what percentage of your loan amount you will pay in interest over the full loan term if you never refinance or sell. On a 30-year fixed mortgage, this is typically between 50% and 100% of the original loan amount. This number is not a problem — it is just what long-term financing costs — but it underscores why your interest rate matters so much.

Other Considerations discloses important terms: whether the loan can be assumed by a future buyer, whether there is a prepayment penalty, whether late payments report to credit bureaus, and whether homeowner's insurance is required. Read these. A prepayment penalty, in particular, can trap you if you refinance or sell within the penalty period.

The contact information section at the bottom identifies your lender, mortgage broker (if applicable), and real estate agent. Keep this page. If you need to escalate a dispute, you need these names and license numbers.

What to Do If Something Looks Wrong

If a number on your Loan Estimate doesn't match what you were quoted verbally or in an email, put your concern in writing immediately. Lenders cannot change Loan Estimate figures after you've received the document without a valid 'changed circumstance' — and 'we made an error' is not a valid changed circumstance. You have the right to receive a revised LE only when something genuinely changed (property appraisal, loan amount, etc.).

The most common red flags on a Loan Estimate are origination fees above 1% of the loan amount with no offsetting lender credit, duplicate fees in Section A (for example, both an origination fee and a separate underwriting fee that together exceed 1%), and any prepayment penalty on a standard 30-year fixed purchase loan.

Compare your Loan Estimate to at least one other LE from a competing lender. Use the same loan amount, term, and property so the comparison is apples-to-apples. If the competing LE shows meaningfully lower Section A charges, send your preferred lender the competing LE and ask them to match it in writing.

• Origination charges above 1% of the loan amount (without discount points you requested): ask for itemization
• Both an origination fee and a separate underwriting fee: may be double-counting
• A prepayment penalty on a standard purchase loan: negotiate for removal
• Rates higher than what you were quoted: request a revised LE or explanation in writing
• Any fee described vaguely as 'administrative,' 'processing,' or 'document preparation': ask what it covers