Two standard forms carry the most important numbers in a mortgage: the Loan Estimate you receive after you apply, and the Closing Disclosure you receive before you close. They use matching layouts on purpose, so you can line them up and see what changed. Here is what each one is for and what to check.
The Loan Estimate: your first look at the loan
After you apply for a mortgage, the lender must send you a Loan Estimate within three business days of receiving your application. It is a three-page form that summarizes the loan you requested: the loan amount, interest rate, estimated monthly payment, estimated closing costs, and the cash you would need at closing. Because every lender uses the same form, it is also the easiest way to compare offers.
When your Loan Estimate arrives, check:
- Your name and the loan basics. Loan term, purpose, product, and loan type should match what you discussed.
- The loan amount. For a purchase, the loan amount plus your down payment should equal the sale price. If it doesn’t, ask why.
- Principal and interest versus the total monthly payment. The estimated total monthly payment can include mortgage insurance and escrow for property taxes and homeowners insurance, so it is usually higher than principal and interest alone.
- Costs that aren’t escrowed. Anything not included in escrow is something you would pay directly, often in larger lump sums.
- Rate lock status. The form shows whether your rate is locked and, if so, until when.
- Prepayment penalty and balloon payment. The form shows whether the loan has either feature.
- Points and lender credits. Points are an upfront charge for a lower rate; lender credits offset closing costs, usually in exchange for a higher rate. Ask how the options compare.
- Services you can shop for. Some third-party services required by the lender can be shopped separately.
- The Comparisons section. The APR and Total Interest Percentage (TIP) help you compare the cost of similar loans from different lenders.
The Closing Disclosure: the final numbers
The Closing Disclosure is a five-page form with the final terms and costs of your loan. Lenders are required to provide it at least three business days before your scheduled closing. Those days are your window to ask questions and resolve problems before you sign.
Line them up: what to compare
| Check this | What to look for |
|---|---|
| Loan term, purpose, product, and loan type | They should match your most recent Loan Estimate. If not, ask your lender right away. |
| Loan amount | If it went up, ask why. One possible reason is closing costs being added to the loan. |
| Interest rate | If you locked your rate, the lender can change it only in limited circumstances. |
| Estimated total monthly payment | Make sure it is a payment you can comfortably make every month. |
| Closing costs and cash to close | Compare them with your Loan Estimate and ask about any significant change or new service. |
| Seller credits | Confirm they reflect what you agreed to with the seller. |
| Escrow account | Confirm what is and isn’t included, such as property taxes, homeowners insurance, and HOA dues. |
Questions worth asking April
- What could still change between now and closing, and why?
- How do points or lender credits change my rate and total cost over the time I expect to keep the loan?
- Which services can I shop for, and how do I choose a provider?
- How much should I plan to bring to closing, and how do I send it safely?
Protect your closing funds. Wire fraud often starts with an email that looks like it came from your lender or title company. Before you wire money, confirm the instructions by calling a phone number you already know is correct, not one listed in the email.
Sources
This article is general education, not a loan offer, rate quote, or commitment to lend. Your Loan Estimate and Closing Disclosure govern the terms of your own loan.