How to Read a Loan Estimate: Line by Line Breakdown

Within three business days of submitting a mortgage application, your lender is required by law to provide a Loan Estimate. This standardized three-page document contains everything you need to compare loan offers — if you know how to read it. Most borrowers do not.

Page 1: The Big Picture

The top of page one shows the property address, loan amount, loan term, interest rate, and whether the rate is fixed or adjustable. The Projected Payments section shows your estimated total monthly payment — principal and interest, mortgage insurance if applicable, and estimated escrow for taxes and insurance.

This total monthly payment is what you compare across Loan Estimates from different lenders — not just the interest rate in isolation.

Page 2: Where Costs Are Detailed

Section A — Origination Charges: This includes lender fees, origination points, and any discount points. This is the most important section for comparing lenders side by side.

Section B — Services You Cannot Shop For: Appraisal, credit report, flood determination. These are lender-selected and you cannot change providers.

Section C — Services You Can Shop For: Title insurance, settlement, attorney fees. You can compare providers and potentially save money here.

Page 3: The APR and Comparisons

The Annual Percentage Rate on page three incorporates both the interest rate and fees into a single number — giving you a true cost comparison across lenders. A lender with a lower rate but higher fees may have a higher APR than a competitor with a slightly higher rate.

What Cannot Change at Closing

Origination charges in Section A, your locked interest rate, and transfer taxes are legally fixed at zero tolerance — they cannot change. Other fees have limited or unlimited tolerance for change.

At East Coast Mortgage, we walk every borrower through their Loan Estimate line by line. Book a call to get started.