The Loan Disclosure details the final costs and terms of the loan arrangement. The form and details are set by regulation; heres what you can expect on Page 1. Loan Amount. The total sum you are borrowing. Interest Rate. The % paid to borrow, not including fees. Terms of balloon payment (if there is one). Terms of pre-payment penalties, if applicable. Projected Payments over the life of the loan, including: Principal & Interets Mortgage Insurance Estimates of Escrow Payments, which usually do change over time. Closing Costs – details of expenses required to close the loan. Cash To Close This form must be provided at least 3 business days before loan consummation.

Regulations require lenders to document the final terms of the loan, and to deliver the document – called the Closing Disclosure – at least 3 business days before scheduled loan consummation. The Closing Disclosure cannot be verbal; it must be a digital or paper document. Any changes after deliver of the Closing Disclosure start the clock again: a new Closing Disclosure must be delivered, at least 3 business days before a revised loan consummation date. In a few circumstances, waiver of the 3-day waiting period is possible, but only when this waiting period would trigger an authentic financial emergency.

The Loan Estimate form helps you compare different loans; Page 3 of the form summarizes the key figures. Cost-over-time figures ("In ___ Years") chart out the total amount paid, and the amount applied against loan principal. This ratio usually changes over time. Annual Percentage Rate - APR - gives you the ratio of interest PLUS any applicable fees for a complete percentage cost, per year. Total Interest Percentage - TIP - shows interest over the life of the loan, in relation to the loan amount. For example, a $500K loan with a TIP of 20% indicates that you would pay $600K (20% of $500K = $100K) in total.

The mortgage Loan Estimate includes two lists of services involved in the loan process: services you CAN shop, and services you CANNOT shop. Borrowers are free to shop and compare the first list; they may have the lender provide these services, or another part. Borrowers MUST use the lender or listed provider for services on the other list. The CAN shop list might include the following: Pest Inspection Property-Line Survey Title-related services. These might be broken down further: Lenders title policy, protecting the lenders interest in the collateral (usually, the property.) Settlement agent fees, to cover the costs of facilitating the final transaction. Title Search, to document legal ownership of the property. Title Insurance Binder, which allows use of the title search results for a period of time. Fees from providers on the list provided by the lenders are restricted by the Loan Estimate figures; their fees cannot change by more than 10% between estimate and closing disclosure. Providers not on the list are not restricted by the Loan Estimate; the lender is not responsible for changes in their fees or variances from the estimate.

The mortgage Loan Estimate includes two lists of services involved in the loan process: services you CANNOT shop, and services you CAN shop. See the other video in this series on "can shop." The Cannot Shop list covers fees and costs for outside parties (not the lender themselves). This list may include: Tax status research on the property Tax monitoring on property-tax payments Appraisal, which gives the lender a reliable value for the property Credit Reporting on the borrower. Flood Risk fees Flood Zone Monitoring Fees for these services in the Loan Estimate and in the final Loan Disclosure must match. There is ZERO tolerance for change on these items under lender compliance regulations.

This video explains the Loan Costs section of the mortgage Loan Estimate form. Key terms for which figures are provided include: Closing Costs: the set of fees involved in transferring title of the property to the buyer. Origination Charges: fees the lender collects for the mortgage process. These may include fees for handling the application itself, as well as "Origination Fees" — paid by the lender to a party that originates your loan, such as a mortgage broker. Points: essentially, a form of prepaid interest. Points are paid at time of the loan to lower the interest rate of the loan. Points may be tax deductible. Underwriting: fees charged by the lender to evaluate loan risks, based on the transaction and the borrowers financial attributes. The Loan Costs section is usually found on Page 2 of the Loan Estimate.

Lenders provide a Loan Estimate form within 3 business days of application for an approved loan. This form documents the terms, projected payment, costs and other details. These definitions may be helpful in interpretation: Loan Amount: total dollars borrowed, which is not the same as total borrowing cost. Interest Rate: cost you will pay each year to borrow, converted to a percentage rate. Not quite the same thing as: APR (Annual Percentage Rate): this includes interest rate, points (if used), mortgage broker fees, and other charges you pay to get the loan. Monthly Principal & Interest: payment amounts that go to reducing loan principal, and to paying interest, each month. (Mortgage insurance and escrow payments are not included here.) Projected Payments: approximate payment amounts over the years, with the major components such as principal, interest, mortgage insurance, escrow and assessment broken out. Estimated Closing Costs: specific costs to close, detailed. These are directly loan-related costs. Estimated Cash to Close: sum of estimate, plus any other known costs, to provide the total cash needed at loan close.

When an eligible mortgage proceeds to close, lenders are required to deliver a Closing Disclosure form, at least 3 business days before loan consummation. This form details the actual transaction terms and costs to be committed at closing and consummation. The Closing Disclosure must be delivered in writing (digital or paper). The details of the disclosure are specified by Federal guidelines; only the details specified by the CFPB should be included. Should transaction terms or transaction costs change prior to loan consummation, an updated Closing Disclosure should be provided by the lender. This may change the loan consummation deadline in turn, requiring an additional 3-day waiting period, in some cases. Loan closing and loan consummation are not exactly the same thing; although they may occur at the same time in some US States, they are legally distinct. Loan Consummation: borrower becomes contractually obligated to the lender (but not necessarily the seller.) Closing: all parties have committed and signed the necessary documents. The 3-business-day period applies to the gap between delivery of the Closing Disclosure, and legal loan consummation. Lenders will have more information on the specific circumstances that apply to a given transaction in a given US State.

Lenders supply a Loan Estimate form for valid mortgage applications. This form documents these essential elements of the approved loan: Services borrowers CAN shop in relation to the loan Services borrowers CANNOT shop Loan terms Loan costs Project payments Cash and costs required to close the loan A loan summary to aid comparing this estimate to other estimates. Loan Estimate forms also provide details about loan assumption policies, appraisal, insurance, late-payment policies, and refinancing. The Estimate should also disclose whether the lender intends to service the loan directly. All Loan Estimates are not identical. Information that is NOT related to a specific application may be excluded. Careful reading and comparison is always a good practice.