As you prepare to get financing for your new home, prospective lenders will provide you with a loan estimate once you complete a mortgage application. The loan estimate is useful for comparing costs across lenders in a format that is simple to understand. A loan estimate is an essential part of the home buying process and can help to answer several important questions you may have about your loan and your expected payments. Read below to learn more about what the loan estimate form can do for you.
How Much Money You Are Borrowing
The total amount of the loan is specified in the loan terms section. A box at the top of the loan estimate will also determine the length of the long term, the loan type, and the mortgage type, such as fixed or adjustable.
What Your Loan Terms Are
The loan terms section will also outline your interest rate, monthly principal, interest owed, and whether a balloon payment is due. The loan estimate also details the amount of prepayment penalty and the number of years you may owe a prepayment penalty.
What Your Projected Payments Are
This section will feature a repeat of your principal and interest payment total alongside additional charges. These include the cost of mortgage insurance and estimated escrow costs, including insurance premiums and taxes. The loan estimate contains projections for the first several years of your loan as well as subsequent years, but costs reflected here may vary during these different periods.
How Much the New Mortgage Will Cost You
Any closing costs associated with your mortgage loan will be broken down across several sections. Loan costs will specify the charges the lender is assessing for your loan, which include upfront fees, application fees, mortgage points, and unwriting fees.
The Closing Costs
Closings costs include a variety of fees associated with purchasing a home. Fixed costs will consist of appraisal fees, credit report costs, and tax research. Prepaid items such as mortgage insurance, homeowners insurance, and set property taxes are also under closing costs.
How Much Cash You Need to Close
The cash needed to close is specified on the second page of the loan estimate form. It will include closing costs, with the down payment added to the total.
How Your Loan Cost Compares to Other Loans
The comparison section of the estimate provides you an opportunity to compare your loan to the terms offered by other lenders. Make sure to review the same type of loan from every lender for an accurate comparison.
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+.