The Loan Estimate, or LE, is a standardized mortgage disclosure designed to help a borrower understand and compare proposed financing.
What It Shows
- Loan amount
- Interest rate
- Monthly principal and interest
- Estimated taxes and insurance
- Mortgage insurance
- Estimated closing costs
- Estimated cash to close
- Whether terms can change
- APR and comparison information
When It Is Triggered
For disclosure purposes, the Consumer Financial Protection Bureau (CFPB) identifies six pieces of information that constitute an application: name, income, Social Security number for a credit report, property address, estimated property value, and desired loan amount.
It Is Not a Loan Approval
Receiving a Loan Estimate does not mean income, assets, credit, property, or underwriting have received final approval.
How to Compare Lenders
- Interest rate
- Discount points
- Origination charges
- Lender credits
- Mortgage insurance
- Cash to close
- Monthly payment
- Loan structure
- Rate-lock terms
- Ability to execute the closing
Homebuyer takeaway: Read the entire financing proposal, not just the advertised interest rate.
Sources
CFPB: What Is a Loan Estimate?
CFPB: Information Needed for a Loan Estimate
CFPB: Compare Loan Estimates