One of the best ways to comparison shop for a mortgage loan is by asking lenders for a loan estimate. A loan estimate is a document a lender prepares for you that shows you the costs of a loan and other vital details. If you ask a few lenders for these, you can easily compare your loan options to choose the best one. Here are some details about loan estimates to help you understand what they are, how they work, and how to use them.
All Lenders Use Loan Estimates
In the past, lenders called these documents good faith estimates. Today, they call them loan estimates, but these are the same things. Every lender uses loan estimates to show borrowers the details about the loans they offer. You can request one from a lender; however, the lender might require that you apply for the loan first. Applying for the loan is necessary for the lender to see your financial state and to determine if they will issue you a loan. It is also necessary for the lender to compute the financial aspects of your mortgage loan.
The Information on a Loan Estimate
A loan estimate contains three pages of information. The first page contains vital details about the loan, including the date the lender prepared the document. It also tells you the length of the loan the lender offers, the interest rate, and the monthly payment. The first page also states the amount of cash you might need to use this loan type. It will also describe the loan program on this page.
The second page tells you the details about the fees involved with the loan, as well as the services you will need if you go through with the loan. Finally, you will find several details on the third page. On this page, you can learn more about the loan amortization and the APR.
How to Use These Documents
If you want to find the best loan, you can apply with several lenders and receive several loan estimates. When you have them, you can compare the differences. For example, which loan offers a lower interest rate? Which lender charges higher fees for the loan? When you compare these things, you can choose the loan that seems best to you.
If you would like to apply for a loan, talk to a mortgage lender. A lender can help you do this and offer a loan estimate afterward.
When was the last time you realized you were in the red financially? Although most people don't think about their finances on a day to day basis, it can be easy to find yourself living paycheck to paycheck if you aren't careful. I began thinking carefully about the financial implications of some life decisions I was making, and I knew I had to make a difference. I talked with a loan officer about getting things together, and he was instrumental in helping me to work things out. Read more about my financial successes and failures on this little website. You might be able to avoid some of my previous mistakes.