Understanding Your Loan Estimate, Line by Line

What a Loan Estimate Is and When You Get It

A Loan Estimate is a three-page form required by federal law for most home purchase and refinance loans. It lists the loan you applied for, your estimated monthly payment and your estimated closing costs, in a standard layout created by the Consumer Financial Protection Bureau (CFPB). Because the layout is the same for everyone, you can line up two loan options side by side and see exactly where they differ.

You receive it shortly after you apply. For this form, an application means you've provided your name, income, Social Security number, the property address, an estimate of the property's value and the loan amount you want. Federal rules set the deadline for delivering it; the CFPB explains the details.

A Loan Estimate is not an approval and doesn't commit you to anything. Nothing moves forward until you tell us you intend to proceed. Before closing, you'll receive a Closing Disclosure with your final terms, laid out in the same order so you can compare the two.

Page 1: Loan Terms, Projected Payments and Costs at Closing

The top of page 1 shows the date the estimate was issued, the property, the loan program (such as conventional, FHA or VA), whether the loan is for a purchase or refinance, and whether your rate is locked. If it isn't locked, the rate and the costs tied to it can change. If it is locked, check the date and time the lock expires and make sure that works with your expected closing.

Loan Terms lists the loan amount, interest rate and monthly principal and interest, and answers yes or no to whether any of those can increase after closing. It also tells you whether the loan has a prepayment penalty or a balloon payment. For most borrowers on a fixed-rate loan, the answer to every can-it-increase question should be no. If you see a yes, ask us to explain it before you go further.

Projected Payments shows your estimated total monthly payment, including mortgage insurance if your loan has it and an estimate of property taxes and homeowners insurance. It also tells you whether those taxes and insurance will be collected in an escrow account or paid by you directly. On an adjustable-rate loan, this table shows how the payment can change over time.

Costs at Closing gives two headline numbers: estimated closing costs and estimated cash to close. Cash to close is what you'd bring to the closing table, after your down payment, deposits and any credits are counted.

Page 2: Closing Cost Details

Page 2 breaks closing costs into lettered sections. The left side, Loan Costs, covers what it costs to make the loan: A is origination charges, including any points you pay to lower your rate; B is services you cannot shop for, such as the appraisal and credit report; C is services you can shop for, mostly title and settlement services; and D totals them.

The right side, Other Costs, covers items that come with owning the home or recording the loan: E is taxes and other government fees, such as county recording fees; F is prepaids, such as your first year of homeowners insurance and prepaid interest; G is the initial deposit into your escrow account; and H is other costs, such as an owner's title policy or HOA fees connected to a purchase. Sections I and J total everything.

At the bottom, Calculating Cash to Close shows how the closing costs, down payment, earnest money deposit, seller credits and any other adjustments add up to the cash-to-close figure from page 1. If a credit you negotiated in your purchase contract isn't showing, ask about it early.

Section-by-Section Quick Reference

Page 3: Comparisons and Other Considerations

The Comparisons table is the most useful tool for weighing one loan option against another. 'In 5 Years' shows how much you'd pay in total over that period and how much of it goes toward principal. The Annual Percentage Rate (APR) reflects the interest rate plus certain loan costs, which is why it is usually higher than your interest rate. The Total Interest Percentage (TIP) shows the total interest you'd pay over the full loan term as a percentage of the loan amount.

Other Considerations covers whether you'll receive a copy of the appraisal, whether a future buyer could take over the loan (assumption), whether homeowners insurance is required, how late payments are handled and whether the loan is expected to be serviced by the company that funds it or transferred to another servicer. Many loans are transferred after closing; the terms of your loan don't change when that happens.

The page ends with a signature line. Signing only confirms you received the estimate. It doesn't accept the loan.

What Can Change Before Closing

Federal rules group closing costs by how much they can change. Some charges, such as origination charges, generally can't increase at closing. Some, such as certain third-party services, can rise only within a limited total. Others, such as prepaid interest, homeowners insurance and escrow deposits, can change because they depend on your closing date and the actual quotes. The CFPB explains each group.

There are legitimate reasons for a revised Loan Estimate: you change the loan amount or program, the appraisal comes in differently than expected, your rate is locked after the first estimate was issued, or new information about your income, credit or the property comes to light. When that happens, you'll get a revised Loan Estimate that shows what changed.

Rates move every business day. If you're weighing two options or two estimates, check that they were issued close together and that you're comparing the same lock status. Freddie Mac publishes a weekly national average if you want context on the current rate environment, but your own rate depends on your loan, property and credit.

Colorado and El Paso County Items to Know

Title insurance: In Colorado, the standard purchase contract says who pays for the owner's title policy, so it's negotiated between buyer and seller. If you're buying, check your contract against where the owner's policy shows up on your Loan Estimate. The lender's title policy, which protects the lender, is a separate line in section C.

County recording fees: Your deed and deed of trust are recorded with the county where the property sits. For homes in Colorado Springs, that's the El Paso County Clerk and Recorder, which publishes its current fees. These appear in section E.

Property taxes and metro districts: Colorado property taxes are paid in arrears, so the taxes on your bill relate to the prior year. Many newer neighborhoods, especially on the east and north sides of Colorado Springs, are in metropolitan districts that add to the property tax bill. A higher tax bill raises your escrow payment, so make sure the estimate reflects the actual property once you're under contract. The El Paso County Assessor and Treasurer records show what applies.

Homeowners insurance: Hail and wildfire risk affect insurance costs along the Front Range. The insurance figures on your estimate are placeholders until you have a real quote, so shop for coverage early and send us the quote so your estimate, escrow and cash to close are accurate.

HOA costs: Many Colorado Springs neighborhoods have HOAs with dues and transfer or status-letter fees at closing. These often appear in section H.

Your Loan Estimate Review Checklist

Work through these with your Loan Estimate in hand. Check them off as you go.

How We Walk You Through Yours

Countryside Lending has helped Colorado borrowers since 2006. Our process is simple: a quick online application that takes about 5–10 minutes, a quick call to go over your loan options, and a pre-approval letter. When your Loan Estimate is ready, we'll go through it with you line by line, explain how each option affects your payment and cash to close, and update it as your purchase or refinance takes shape.

Your loan officer is Brendon O'Connor (NMLS #249969). If you're buying, refinancing or using a VA loan, the related guides and loan pages below cover the details for each.