The Loan Estimate is a three page instrument panel. Here is what each page measures and which line actually settles a comparison.
A Loan Estimate is a standardised three page form. Every lender fills in the same boxes in the same order, which is the whole point: two estimates for the same loan amount and the same term can be laid side by side and read line for line.
Page one is the summary readout. Loan amount, interest rate and monthly principal and interest sit at the top, each with a yes or no answer to whether it can increase after closing. Below that, Estimated Escrow and Estimated Total Monthly Payment tell you what actually leaves your account. Further down, Estimated Cash to Close is the number most borrowers have not budgeted for, because it folds closing costs and prepaid items in with the down payment.
Page two is the itemisation, and it is where offers separate. Section A is what the lender charges: origination, points, application fees. Section B is services you cannot shop for. Section C is services you can. Sections E, F and G are taxes, prepaids and escrow funding, which are properties of the house and the calendar rather than of the lender. When you compare two estimates, compare section A first. That is the part the lender controls.
Page three carries the comparison figures. Total interest percentage and the five year cost are useful precisely because they are awkward: they show what the loan costs over time rather than what it costs this month.
One practical rule. A Loan Estimate is only comparable to another Loan Estimate that assumes the same loan amount, term, product and lock period, and that was issued around the same time. Change any of those and you are comparing two different instruments.
Illustrative sample figures for a template demonstration. Not a rate quote, not an offer to lend, and not live market data.
