A Loan Estimate is a standardized form that makes comparing mortgage offers straightforward. Focus on three key areas: the interest rate and APR on Page 1, origination charges in Section A, and services you can shop for in Section C.
The APR reflects the total cost of borrowing including fees, making it the best single number for comparing loans. Section A shows lender-specific fees that are negotiable. Section C lists services where you can shop for your own providers.
Get 3-5 Loan Estimates within the same week to compare. Ignore Section H (prepaids) since taxes and insurance cost the same regardless of lender. The lowest APR is usually the best overall deal.
What to Compare
Compare the interest rate APR monthly payment and total cash to close across lenders. The APR gives you the true cost of borrowing including all fees. A lower APR generally means a better deal over the life of the loan.
Page 1 Key Numbers
Page 1 shows the loan amount interest rate monthly principal and interest payment estimated taxes and insurance and whether the payment can change. Verify these numbers are accurate and comparable across lenders.
Section A
Section A lists origination charges including application fee underwriting fee processing fee and points. These vary by lender and are negotiable. Total all Section A fees for a direct comparison between lenders.
Section C
Section C lists services you can shop for independently: title insurance survey pest inspection and closing attorney. You can find your own providers to potentially lower these costs significantly.
Total Cash to Close
Total cash to close includes your down payment closing costs and prepaids minus any lender credits. Compare this number across lenders. A lender with higher closing costs may not be the best deal even with a lower rate.
Comparison Strategy
Get 3-5 Loan Estimates within the same week. Compare the APR total closing costs and monthly payment side by side. Ask about rate lock periods and float-down options before choosing. Choose the best overall value not just the lowest rate.