Whether you’re preparing to apply for a new mortgage or thinking about refinancing your current mortgage, it’s important to know how to compare lenders. This will help you get an accurate picture of how much you’ll be spending on your mortgage. It’ll also allow you to see how much you can save by going to one lender over another.
There’s only one good way to compare lenders, and that’s the Consumer Financial Protection Bureau’s Loan Estimate form. This standardized form looks identical all lenders. This makes it possible for you to compare offers without worrying about hidden fees.
How to Get a Loan Estimate
To get a Loan Estimate, you’ll just need to send a request to each lender with the following information:
- Your name
- Your income
- Your SSN
- The desired loan amount
- The address of the property you need a loan for
- The listing price or value of the property
Each lender should send you a Loan Estimate in 3 days or less. They are legally required to do so, thanks to the Consumer Financial Protection Bureau. Some lenders will even send you a Loan Estimate immediately.
What to Do Once You’ve Gotten Your Loan Estimate Forms
Do you have all your Loan Estimates in hand? Now, it’s time to compare! Thankfully, this is pretty easy due to the standardized format. You just need to know what each section means. There are 7 sections. Here’s what each one entails.
Section A: Origination Charges
Are you looking for a lower rate or a discount on your loan? Section A is where you’ll see the points or credits for lower rates or discounts. With some lenders, there will also be fees in this section, such as processing, origination, or underwriting fees.
Section B: Services You Cannot Shop For
Section B may have a few different line items, but most importantly, it will discuss the appraised value of the home you’re getting a mortgage for. With some lenders, you may also see additional fees in Section B.
Section C: Services You Can Shop For
In many cases, Section C will be exactly the same across all the Loan Estimate forms. But in some cases, there will be a slight difference if a lender has a certain agreement with a title company.
Section D: Total Loan Costs
This is simply Sections A, B, and C added together.
Section E: Taxes and Other Government Fees
These should be the same on all estimates.
Section F: Prepaids
These should be the same on all estimates.
Section G: Initial Escrow Payment at Closing
These should also be the same across all estimates.
Section H: Other
This section may or may not have anything in it.
Section I: Total Other Costs
This is simply Sections E, F, G, and H added together.
Section J: Total Closing Costs
This section has all the costs added together.
Want to Know More About Loan Estimates and Comparing Lenders?
We’re here to help! At Loan Cabin, we believe it’s important to be informed when it comes to your mortgage. Get in touch with us today if you have questions or if you’re ready to get started.