What a Loan Estimate is
In a U.S. mortgage application, the lender provides a standard document called a Loan Estimate. It is meant to show you, in a comparable format, the terms being discussed and an estimate of costs. Receiving it does not mean the loan is approved, and it does not mean those numbers cannot change.
What it usually includes
- Loan terms: amount, term, and whether the rate is fixed or adjustable, based on what is being quoted.
- Projected payments: not only principal and interest; you will often also see taxes, insurance and, if applicable, association fees, when they are known or estimated.
- Estimated closing costs and how much money you might need at signing, based on the information available at that time.
The exact labels on the form can be reviewed together. The goal is not to memorize every line, but to know what to ask if something is unclear.
What can change
An estimate is prepared with the information available on that date. It can be updated if the price, loan type, your file, the appraisal, taxes or third-party costs change. That is why it should not be read as a guarantee of a rate, a payment or an approval. Financing is subject to credit approval and to verification.
General information, not financial advice or a commitment to lend. Subject to credit approval.