The 3-page document every borrower gets, explained section by section, including which fees your lender actually controls.
Within three business days of applying for a mortgage, every lender is required by law to give you a Loan Estimate (LE). It's a standardized 3-page document that shows your estimated interest rate, monthly payment, closing costs, and other key loan details.
Because the format is standardized by the CFPB (Consumer Financial Protection Bureau), every Loan Estimate follows the same format. But most people don't know which fees are controlled by your lender and which aren't.
The most important thing to understand: Your lender only controls the fees in Section A (origination charges) and Section B (services you cannot shop for). Everything else on the Loan Estimate is set by third parties, the government, or your specific property.
The first page is the summary. It shows your loan amount, interest rate, monthly principal and interest payment, and whether your rate is locked.
It also shows your projected monthly payment including taxes, insurance, and PMI (if applicable). This is the number that matters for your budget, not just the P&I number.
Look at the "Estimated Total Monthly Payment" line. That's what you'll actually write a check for. If it's higher than you expected, this is the time to have that conversation, not at the closing table.
This is where it gets interesting. Page 2 breaks down every dollar of your closing costs into lettered sections. Here's where each section comes from and who controls it.
These are the fees your lender charges for processing and underwriting your loan. This is where lenders make their money, and it's the primary section to compare when shopping.
Your lender selects these vendors. While technically third-party services, your lender decides who provides them and at what cost. That makes them part of the lender comparison.
This is what your lender controls: Section A + Section B. These are the fees set by your lender. Everything else on the Loan Estimate is determined by third parties, the government, or your specific property.
Your lender will give you a list of approved providers, but you're free to shop around for better prices. These are services where you have negotiating power.
These costs are the same regardless of which lender you use. They're based on your property, location, and closing date.
I review every client's LE line by line. I'll make sure you understand every line before you sign anything.
Schedule a Loan Estimate ReviewThe third page shows two important numbers that help you compare loans over time.
APR (Annual Percentage Rate): This rolls your interest rate plus lender fees into a single number. A lender with a low rate but high fees might have a higher APR than one with a slightly higher rate and lower fees. APR is the apples-to-apples comparison number.
Total Interest Percentage (TIP): The total amount of interest you'll pay over the life of the loan as a percentage of your loan amount. This shows you the true cost of borrowing over 30 years.
These are the lender-controlled costs. The rest is set by third parties.
But always in context with the fees. A lower rate with higher fees might cost more.
APR accounts for both rate and fees. It's the best single number for comparison.
Make sure the estimated taxes and insurance are the same on each LE.
One thing to watch for: some lenders show low estimates for taxes and insurance to make their total payment look lower. Make sure the property tax rate and insurance estimate are the same across all LEs you're comparing. If one lender shows $200/month for insurance and another shows $150, the loan isn't actually cheaper.
About three days before closing, you'll get a Closing Disclosure (CD) that looks almost identical to the Loan Estimate. The CD shows your final, actual costs. By law, certain numbers can't change between the LE and CD (like your origination charges), while others can change within tolerance limits.
If anything on your CD looks significantly different from your LE, ask about it. That's exactly the kind of thing I catch before closing day so there are no surprises.
Here's something a lot of borrowers miss: a Loan Estimate doesn't mean your rate is locked. Until you have a rate lock confirmation, the rate and fees on your LE can change. Rates move daily, sometimes multiple times a day. The beautiful 6.25% on your Loan Estimate could be 6.5% by the time you try to lock it.
Always ask your lender: "Is this rate locked?" If it's not, you're comparing a snapshot that might not exist tomorrow. A locked LE is a commitment. An unlocked one is an estimate of an estimate.
I always make sure my clients understand exactly when their rate is locked, for how long, and what happens if we need to extend it. No surprises.
Send it over and I'll walk through it with you. No obligation, no sales pitch.
Schedule a Loan Estimate Review