Do you know why you get a loan estimate when you apply for a mortgage? Checking the latest national average mortgage rates can only take you so far when you plan to buy or 澳洲幸运5开奖号码历史查询:refinance a home. To kno🐽w what interest rate you 🌠might pay in real life, you have to get in touch with a mortgage lender and give them some specifics.

A loan estimate is an important document that shows the key details of your mortgage application. You’ll want to review the estimate carefully before moving forward with the 澳洲幸运5开奖号码历史查询:underwriting proc🐻ess to see if you understand the loan and can comfortably af🗹ford it.

What Is a Loan Estimate?

A loan estimate is a three-page form that presents home loan information in an easy-to-read format, complete with explanations. This standardization makes the information easy to digest and compare offers among lenders to see which one is the best deal.

You’ll get a loan estimate within three business days of applying for a mortgage unless you don’t meet the lender’s basic qualifications and your application is rejected. If that happens, the lender must give you a written notice within 30 days stating why your application was rejected. The only fee you may have to pay to get a loan estimate is a 澳洲幸运5开奖号码历史查询:credit report fee.

A loan estimate is valid for 10 business days. If you want to accept a loan offer, try to do it within that time frame, or the lender may change the terms and issue a new loan estimate if you take more time to decide.

You won’t necessarily get a different offer (or a worse one), but things can change with market conditions and your credit. Mortgage rates are known to change multiple times within a single day. Of course, it might tඣake you longer than 10 days to identify a property you want to buy and make an offer, so you should take your time with such important decisions.

You can and should get a loan estimate before you find the property you want to buy, especially in a seller’s market, as buyers often need to act quickly to make a purchase offer. You want to have mortgage 澳洲幸运5开奖号码历史查询:preapproval and maybe even pre-underwriting to be confident you can get 🦩financing.

Keep in mind that you need a property address and purchase price to get a loan estimate. What’s the solution if you haven’t pinned one down yet? Provide a property address for a similar home and the purchase price for which you want approval. A loan estimate is not an official preapproval, but it gets you moving in the right direction. The lender can issue a revised estimate after you choose a property.

Which items appear on a loan estimate? We’ll walk you through it page by page and he😼lp y𒁏ou understand each one.

Page 1: The Fundamentals

The first page begins with basic information:

• Lender’s name and address
• Applicant’s name and address
• Property address and sale price
• Loan term, type, and purpose
• Loan ID number
• Loan estimate date
• 澳洲幸运5开奖号码历史查询:Rate lock information

The Basics

Loan Terms

The next box details the loan’s terms:

• Loan amount and whether it can increase after closing
• Interest rate and whether it can increase after closing
• Monthly principal and interest payment and whether it can increase after closing
• 澳洲幸运5开奖号码历史查询:Prepayment penalty (if any, and if so, how much and when it applies)
• 澳洲幸运5开奖号码历史查询:Balloon payment (if any)

These days, most loans don’t have prepayment penalties or balloon payments. Also, your loan amount is unlikely to increase after closing. These three disclosures relate to features that were more common during the 澳洲幸运5开奖号码历史查询:housing bubble of the early to mid-2000s.

It’s also unlikely that your interest rate or monthly principal and interest payment would increase after closing. If you are taking out an 澳洲幸运5开奖号码历史查询:adjustable-rate mortgage, they may. Most people get 澳洲幸运5开奖号码历史查询:fixed-rate mortgages.

Projected Payments and Closing Costs

The second box on Page 1 goes into more detail about your 澳洲幸运5开奖号码历史查询:projected monthly payment. In addition to your monthly principal and interest payment, it shows two items that are likely to apply if you’re putting down less than 20%: your estimated monthly 澳洲幸运5开奖号码历史查询:mortgage insurance payment and your estimated monthly escrow payment of 澳洲幸运5开奖号码历史查询:homeowners insurance and property taxes.

Finally, the third box on Page 1 shows your estimated 澳洲幸运5开奖号码历史查询:closing costs and estimated cash to close. Page 2 will break down these costs in detail.

Page 2: Itemized Mortgage Costs

The loan estimate’s second page itemizes the loan’s closing♚ costs an🐬d shows how much cash you’ll need to finalize the loan.

Origination Charges

The typical mortgage 澳洲幸运5开奖号码历史查询:origination fee is around 1%. It might be higher if you 澳洲幸运5开奖号🦄码历史查询𓆉:choose to pay points to lower your interest rate. The loan’s underꦓwriting and application fees are included here too. These fees compensate the lender for its efforts💛 to qualify you for a loan and get you the money so you can buy a home. They also vary by lender and can be a good place to save money.

Closing Services for Which You Cannot Shop

Many other vendors are involved in making your m✅ortgage happen. Some vendors you can choose, while for others, your lender gets to choose.

• Your lender will order an 澳洲幸运5开奖号码历史查询:appraisal to ensure the home's value matches your offer.
• A credit report tells the lender whether you can repay the money you borrow (or not).
• Flood determination and monitoring fees are used to find out if your property is in a high-risk area for flooding. If it is, 澳洲幸运5开奖号码历史查询:you’ll have to buy flood insurance. This is separate from homeowners insurance, which 澳洲幸运5开奖号码历史查询:doesn’t cover flooding.
• The tax monitoring fee and tax status research fee make sure 澳洲幸运5开奖号码历史查询:you pay all of your property taxes on time every year.

Closing Services for Which You Can Shop

• A pest inspection fee goes to a professional who examines the home you want to buy for evidence of wood-destroying insects like termites and carpenter ants. Any significant damage must be repaired before closing.
• The survey fee verifies the property’s boundaries.
• The four title fees go toward making sure you can take ownership of the property free and clear of claims by any 澳洲幸运5开奖号码历史查询:third party, such as a previous owner’s relative or tax authority. You’ll also have to buy a 澳洲幸运5开奖号码历史查询:title insurance policy that protects the lender against claims that might arise later that weren’t uncovered during the title search. The title company is also often the company that handles your loan closing, so there’s a fee for that too. This fee might be listed as an escrow agent or 澳洲幸运5开奖号码历史查询:settlement agent.

It doesn’t matter wh✱ether the cost of these closing services differs from one lender to the next when you’re deciding on a lender. They’re just estimates, and you’ll be able to shop around for these provide𒆙rs and decide how much to pay.

Taxes and Other Government Fees

Any fees your local government charges when a property is transferred and a 澳洲幸运5开奖号码历史查询:new deed of ownership is recorded go here.

Prepaids

Lenders require homeowners ༒to have their homeowners insurance in place before the loan can close, so there’s a charge for that here that will usually cover six or 12 months’ worth of insurance.

You might have to prepay mortgage insurance premiums and property taxes, and you’ll probably have a charge for 澳洲幸运5开奖号码历史查询:prepaid interest. It coveꩲrs the days you’ll have the loan between your closing and the fไirst of the following month when you’ll make your first principal and interest payment.

Initial Escrow Payment at Closing

If the loan requires you to maintain an 澳洲幸运5开奖号码历史查询:escrow account (shown on Page 1 of your closing disclosure, also called an 澳洲幸运5开奖号码历史查询:impound account)ﷺ, then this section will show how much you have to fund that account to cover future homeowners insurance premiums, mortgage insurance premiums, and property taxes. Lenders ar♏e allowed to keep a two-month cushion in this account, so that’s probably what they’ll charge you here.

Other

Remember that lender's title insurance policy you have to buy? It doesn’t cover you. It’s a good idea to buy an owner’s policy as well, and that fee will show up in this section.

Total Closing Costs

This line sums up all of the above charges. I𒊎t should match the estimated closing costs from the bottom of Page 1. If you’re getting any lender credits, you’ll see those subtracted here.

Calculating Cash to Close

This section totals up your closing costs and down payment and subtracts any 澳洲幸运5开奖号码历史查询:earnest money deposit you make.

Page 3—Comparisons and More Loan Characte🍨ristics

Additional Information About This Loan

The top of Page 3 says who your loan officer is, what their license number is, and how to contact them (you might also be interested to know how loan officers are compensated). Here’s what else you’ll learn on Page 3:

Comparisons

This box provides four numbers you can use to compare on𒆙e loan estimate with another.♏

• Total principal, interest, 澳洲幸运5开奖号码历史查询:mortgage insurance, and loan costs you will have paid after having the loan for five years (remember, loan costs are on Page 2)
• Total principal you will have paid off after five years, or how much equity you will have in your home, excluding any increase or decrease in its market value
• Annual percentage rate, a figure that accounts for the loan’s 澳洲幸运5开奖号码历史查询:interest rate and fees combined
• Total interest percentage, which is a figure that shows how much interest you will pay over the entire loan term as a percentage of how much you’re borrowing. For example, your total interest percentage would be 50% if you paid $50,000 in interest on a $100,000 loan.

Other Considerations

This section tells you six more things about the loan for which you've applied:

• The lender may order an appraisal to determine the 澳洲幸运5开奖号码历史查询:home’s value. You’ll have to pay for the appraisal, and you’ll get a copy of it.
• If you sell or transfer the home to someone else, can they take over your loan instead of getting their own? Usually, the answer is no, but some government-guaranteed mortgages can be 澳洲幸运5开奖号码历史查询:assumable.
• You’re required to get homeowners insurance, and you can choose the company, as long as the lender approves of that company. See our 澳洲幸运5开奖号码历史查询:beginner’s guide to 🌸hom🌠eowners insurance if you need help.
• If your monthly mortgage payment is late, at what point will you have to pay a late fee, and how much is the fee?
• Don’t assume you'll be able to refinance this loan later, because your finances and the market might not allow for it.
• The lender you’ve applied with plans to service your loan, meaning they will be the one to collect your monthly payments, 澳洲幸运5开奖号码历史查询:manage your escrow account if you have one, and send your monthly statements. Conversely, they could plan 澳洲幸运5开奖号码历史查询:to 🔜have another company service your ❀loan after closing.

The Bottom Line

The 澳洲幸运5开奖号码历史查询:Co🌠nsumer Financial Protection🉐 Bureau (CFPB) designed the loan estimate to help you understand any mortgage you apply for, whether you’re buying a home or refinancing one. Because ▨any lender who wants your business is required to give you a loan estimate, you can use this form to easily compare offers from different lenders and get a better deal. You can also make sure you aren’t being overcharged for any services and that you understand all the loan’s costs and features. This important form is defin🅠itely one to review closely. Ask your lender questions about anything you don't understand.