Buying a home is one of the most significant financial commitments you’ll make, and comparing mortgage offers can quickly become confusing. Each lender provides a Loan Estimate — a standardized, three-page document that summarizes your loan’s terms, monthly payments, and closing costs. However, reviewing several Loan Estimates individually can be overwhelming.
The Loan Estimate Comparison Worksheet, available for free from the Consumer Financial Protection Bureau (CFPB), helps by organizing the critical information side-by-side in an easy-to-understand format. This allows you to compare “apples to apples” and spot differences in fees, interest rates, and upfront costs that might not be obvious at first glance.
How to Use the Loan Estimate Comparison Worksheet
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Gather Loan Estimates: Apply with at least three lenders and collect their Loan Estimates. Lenders must provide this document within three business days of your application.
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Download the Worksheet: Access the official worksheet from the CFPB website, available as a printable or digital form.
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Enter Key Figures: Transfer the following information from each Loan Estimate into the worksheet:
- Loan Terms: Interest rate, Annual Percentage Rate (APR), and loan type (fixed or adjustable). APR reflects the loan’s overall cost, including some fees, making it a better comparison metric than interest rate alone.
- Projected Payments: Monthly principal, interest, taxes, insurance, and any homeowners association fees.
- Closing Costs: Broken down into three sections:
- Origination Charges (Section A): Fees charged by the lender for originating the loan.
- Services You Cannot Shop For (Section B): Fees for mandatory services like appraisals and credit reports.
- Services You Can Shop For (Section C): Fees for services like title insurance, which you can choose providers for to potentially reduce costs.
- Cash to Close: The total upfront amount needed at closing, including down payment, closing costs, and prepaid expenses.
Why This Matters
Comparing only interest rates can be misleading. For instance, a lender may offer a lower rate but charge much higher fees, increasing your overall cost. The worksheet reveals where the money goes and helps you evaluate which loan best fits your financial situation.
Real-World Example
Imagine Sarah compares two Loan Estimates: “Big Bank Lending” offers a 6.50% interest rate but higher origination fees, while “Local Credit Union” has a 6.75% rate with much lower fees. The worksheet shows that, despite the higher rate, the credit union requires less cash to close, making it potentially the better deal for Sarah’s budget.
Tips for Effective Use
- Ensure Loan Estimates are for the same loan amount and type to make a fair comparison.
- Look beyond interest rates and consider APR and fees in sections A, B, and C.
- Focus on “Cash to Close” to understand how much money you’ll need upfront.
- Use your comparison as leverage to negotiate better terms with lenders.
- Ask lenders to clarify any confusing terms or changes between the Loan Estimate and final Closing Disclosure.
Common Mistakes to Avoid
- Comparing different loan types or amounts, which skews results.
- Ignoring fees and focusing only on the interest rate.
- Neglecting to shop for services listed in Section C, where you can save money.
- Confusing the Loan Estimate with the Closing Disclosure. The Closing Disclosure, which you receive three days before closing, confirms the final terms.
Frequently Asked Questions
Where can I find the Loan Estimate Comparison Worksheet?
Download it for free from the CFPB website.
Is it mandatory to use the worksheet?
No, but it is highly recommended for making informed mortgage choices.
What if Loan Estimate numbers change?
Loan Estimates are good faith estimates. Minor changes are allowed but significant discrepancies should be discussed with your lender.
How long do I have to compare Loan Estimates?
Lenders must honor the terms for at least 10 business days, giving you time to shop around.
By leveraging the Loan Estimate Comparison Worksheet, you gain clearer insight into your mortgage options, helping you choose the right loan confidently. For related information, see our Loan Estimate and Closing Disclosure glossary entries for deeper understanding.