Am I getting a good mortgage offer?

How to read a Loan Estimate

Every lender must give you a standard three-page Loan Estimate within three business days of your application. Because the form is the same everywhere, you can compare offers line by line:

• Page 1, Loan Terms: the rate, the monthly principal and interest, and whether there's a prepayment penalty or balloon payment.
• Page 2, Section A (Origination Charges): what the lender charges, including discount points. This is the section that differs most between lenders.
• Page 2, Section J: lender credits that offset your costs.
• Page 3, Comparisons: "In 5 Years" totals, the APR and the Total Interest Percentage.

Make it a fair comparison

1. Same day. Rates change daily, so ask for estimates on the same day.
2. Same lock period. A 60-day lock usually costs more than a 30-day lock.
3. Same loan. Same loan amount, term and loan type.
4. Points vs. no points. A lower rate often comes from paying points. That only pays off if you keep the loan long enough.

Red flags

• A quote that isn't on a Loan Estimate, or a lender that won't put it in writing.
• Pressure to sign or lock before you've seen the Loan Estimate.
• Large fees for "processing" or "application" that another lender doesn't charge.
• A prepayment penalty or balloon payment you didn't expect.

The CFPB has a sample Loan Estimate and an explainer you can use alongside this tool. See the CFPB Loan Estimate explainer. Thinking about paying points? Use the discount points calculator.