What is the Loan Estimate Form?

a mortgage lender explains a loan estimate form to a home buyer

Knowing what to expect on a Loan Estimate form will help the home-buying process go smoothly.

There are many mortgage closing documents you will encounter during the homebuying process, but one of the most informative and essential is the Loan Estimate form. This legally required document helps boil down the closing costs you will encounter when acquiring a home loan. Being familiar with the forms before you sign them is crucial for avoiding any last-minute surprises in the homebuying process. 

What a Loan Estimate Tells You

A Loan Estimate is just three pages long, but it tells you a lot of valuable information. Crucially, it tells you the terms of your home loan. You receive the Loan Estimate within three days of applying to each potential mortgage lender

Expenses

The Loan Estimate form includes clear “yes” or “no” answers to questions such as whether each amount can increase after the home closing, whether your loan includes a prepayment penalty or balloon payment, and what expenses will be included in your escrow account. 

Projected Payments

The form includes the anticipated monthly mortgage payment, including taxes, insurance, and other assessments. 

Closing Costs

Estimated closing costs are included, along with the amount of cash you will need to have on hand at the time of home settlement. 

Services To Shop For

The Loan Estimate provides you with services you can and cannot shop for, including pest inspections, survey fees, and the appraisal. 

Loan Estimate Data

The form offers data that helps you compare loan offers from multiple mortgage lenders. This data includes the total costs of third-party services, the annual percentage rate, and the amount of interest you will pay over the loan term. The interest amount is expressed as a percentage of your total loan amount. 

Page Two of the Loan Estimate

On the second page of the Loan Estimate, you will find the lender fees and discount points, which are essential information. 

Lender Fees

Also known as “application fees” or “underwriting fees,” among others, these fees are negotiable, and you will want to compare them with other lenders you are shopping. 

Discount Points

These refer to prepaid interests that you have the option of paying to reduce your interest rate. 

A Title Company You Can Trust: Colony Title

At Colony Title, we will help you through the process of getting your property’s title and help you avoid the pitfalls of hidden costs while you buy your home. We are also well trained in identifying any and all errors in public records and helping you resolve them. We specialize in real estate title insurance in both Maryland and Washington, D.C., and we will perform an expert title search, check through all past documentation, and examine records for any fraud or forgery. For more information on how we can get you into the home of your dreams, contact us online or give us a call at (410) 884-1160. To get more updates on housing markets and how to get into your home, follow us on Facebook, Twitter, LinkedIn, and Google+.

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