Blog

How to Read a Loan Estimate Sheet

When you apply for a mortgage, one of the most important documents you’ll receive early in the process is the Loan Estimate. This standardized 3-page form outlines the details of your potential mortgage offer — and knowing how to read it can save you thousands of dollars over the life of your loan.

At Rapid Home Loan, we believe an informed borrower is an empowered one. In this post, we’ll walk you through exactly how to read and understand your Loan Estimate sheet, section by section.

📄 What Is a Loan Estimate?

A Loan Estimate (LE) is a form your lender must provide within three business days of receiving your mortgage application. It gives you a snapshot of:

  • Your loan terms

  • Estimated monthly payments

  • Closing costs

  • And other key figures

It’s designed to make comparing offers from different lenders easier — and more transparent.

🧩 Page 1: The Basics

1. Loan Terms

This section breaks down:

  • Loan amount

  • Interest rate

  • Monthly principal & interest

  • Whether the rate is fixed or adjustable

  • If there are prepayment penalties or balloon payments

🔎 Tip from Rapid Home Loan: Make sure the interest rate and loan amount match what you discussed. If they don’t, ask why.

2. Projected Payments

Here, you’ll see:

  • Your total monthly payment (including taxes, insurance, and mortgage insurance)

  • How that payment could change over time (especially if you have an ARM)

3. Costs at Closing

This is a quick summary of:

  • Total closing costs

  • The estimated cash you’ll need to bring to closing

💵 Page 2: The Numbers

4. Loan Costs (Section A–C)

  • A. Origination Charges: Lender fees (e.g., application, underwriting).

  • B. Services You Cannot Shop For: Fees from third parties chosen by the lender (e.g., appraisal, credit report).

  • C. Services You Can Shop For: Things like title insurance or pest inspections.

🔍 Pro Tip: Comparing these sections across lenders can help you spot unnecessary or inflated fees.

5. Other Costs (Section E–H)

  • Taxes and Government Fees

  • Prepaids (homeowner’s insurance, property taxes, prepaid interest)

  • Initial Escrow Payment at Closing

  • Other (e.g., home warranties, optional insurance)

6. Calculating Cash to Close

Shows how much money you’ll need on closing day — including deposits and credits.

📃 Page 3: Fine Print & Comparisons

7. Comparisons Table

Helps you compare:

  • Total you’ll pay in 5 years

  • APR (Annual Percentage Rate)

  • Total Interest Percentage (TIP)

💡 These figures give you a sense of long-term affordability, not just monthly cost.

8. Other Considerations

Covers:

  • If your loan is assumable

  • If your lender will service the loan

  • Late payment policies

  • Refinance options

9. Confirm Receipt

This section just acknowledges you’ve received the form — you’re not committing to anything yet.

✅ Final Thoughts from Rapid Home Loan

Understanding your Loan Estimate puts you in control. It lets you:

  • Ask better questions

  • Avoid hidden fees

  • Compare multiple lenders confidently

  • Plan for closing day without surprises

At Rapid Home Loan, we walk every client through their Loan Estimate step by step. No jargon. No pressure. Just clear guidance.

Related Posts

Back To Top