What is a Loan Estimate?

What is a Loan Estimate?

Recently, a client asked me the following question:

“It has been years since I took out a mortgage. I notice that instead of the old Good Faith Estimate, I am getting a Loan Estimate. What is a Loan Estimate? Are they the same thing?”

When It’s Out of Your Comfort Zone, Seek Help

 

While I am comfortable and qualified to questions concerning life, disability, home, flood, renters, auto, co-op, and condominium insurance, I don’t possess the same knowledge levels about mortgages. So, I reached out to three of the top home mortgage lenders I know for insight and informal their valuable time.

Somehow, I know this will cost me big time down the road.

My Panel of Experts Answer The Question of “What Is A Loan Estimate?”

 

Ennell Esperance, a Senior Home Lending Advisor (NMLS ID: 68006) with the Home Lending Division of JPMorgan Chase Bank, provided me with some recent history about this topic.

In 2015, the Consumer Financial Protection Bureau, a government agency that regulates consumer financial instruments such as mortgages, retired the Good Faith Estimate form (in part) and created the Loan Estimate form.

The Good Faith Estimate form where lenders used their own language to describe the loans, multiple estimates could seem very different. Consumers were confused by that document.

How Does The Loan Estimate Work?

 

The new Loan Estimate consolidates four forms into two: the Loan Estimate and the Closing Disclosure.

The new Loan Estimate is a three-page form that you receive within three business days after you apply. It is not a loan approval or rejection. It simply gives you loan terms, projected payments, and closing costs for review.

Standardized Wording in The Loan Estimate


Leon T. Gelzer, Sr., (NMLS ID: 41256), a Santander Bank Community Reinvestment Act (CRA) officer and Community Mortgage Development Loan Officer, highlighted how the Loan Estimate standardizes the wording that lenders can use, you’ll see which costs are fixed and which are not, allowing you to shop lenders.

Leon went on to say it also prevents surprise fees by establishing tolerance levels. If you do take the loan and the fee amount estimated is more than the amount paid, the lender makes up the difference.

I would imagine every mortgage lender does their best to avoid this reality.


How Loan Estimate Costs Are Broken Down

Peter Chace, a Mortgage Loan Officer (NMLS ID: 206181), with TD Bank directed me to the Consumer Finance Protection Bureau’s website to view samples of the Loan Costs and Closing Disclosure forms (Click Here to go to the CFPB website) and highlighted how costs are also broken down in the following categories:

  • Loan Costs (origination charges, services you can’t shop for and services you can shop for) and Other Costs (taxes, government recording fees, pre-paid fees, and initial escrow payments, for example).
  • Closing Disclosure
    The Closing Disclosure is a five-page form that buyers receive before closing. It has the final terms and costs associated with the mortgage and specifies the amount of money you need on-hand at closing. Buyers can easily compare the Loan Estimate to the Closing Disclosure. Buyers will have three (3) days to review the form and ask questions.

I want to thank these gentlemen for being so generous in sharing their time with me, and ultimately, you.

Let’s Thank Our Experts



As thanks for their generosity, here is the contact information for each expert who contributed:

Ennell Esperance can be reached by telephone at
718-810-7680, and by email at ennell.esperance@chase.com;
Leon T. Gelzer, Sr.’s office number is 718-302-5418. Leon’s email address is leon.gelzer@santander.us.
Peter Chace can be reached by telephone at 917-715-2818. Peter’s email address is Peter.chace@td.com.

You can also find a copy of the full Loan Estimator, with completed samples in English and Spanish at https://www.consumerfinance.gov/policy-compliance/guidance/mortgage-resources/tila-respa-integrated-disclosures/forms-samples/

Eustace L. Greaves, Jr., LUTCF is an NYS-licensed Independent Insurance Agent and Broker with over 38 years of experience. Eustace is ready to assist you with your life, disability, home, flood, renters, auto, cooperative and condominium, and wedding insurance needs, and can be reached at 718-783-2722, or by email at eustace@insuremeeg.com. You can also contact him by going to his website and completing any of the available “Contact Us” forms.

If you’d like to subscribe to his monthly newsletter, “Health, Safety, and Good News You Can Use,” just to his website, eustace@greavesinsurance.com, and click on any of the “Subscribe” buttons.

Have insurance, income tax, real estate, mortgage, or home inspection questions for Eustace? He’ll be happy to provide the insurance and income tax answers and will continue to call on his expert contacts for help in the other areas. Just send him an email to eustace@insuremeeg.com with the subject line, “Ask Eustace.”

Live Life Fully Covered

One of the best things you can do in life is to “Live Life Fully Covered.”

It’s time to just be honest and admit many bad things, gruesome tragedies and heart-rendering losses don’t always happen to “The Other Guy or The Other Woman.”

You Can Be “The Other Guy”

One day you could be “The Other Guy or The Other Woman” who;

  • Loses their husband or wife whose income helped meet mortgage payments, to cancer;
  • Suffers a life-changing heart attack which requires you to stay home to recuperate for six (6) months to a year or more;
  • During their prime working years finds themselves as the primary care-giver for a parent, other elderly relative, or even a sibling who lacks long-term care coverage;
  • Experiences the pain of  burying a child;
  • Watches as their house containing all their treasured belongings accumulated over a lifetime burns to the ground;
  • Comes home after a hard day at work to discover they’ve been burglarized;
  • Needs money to secure a new place to live while your home, co-op or condo is being rebuilt;
  • Gets sued by the cyclist, pedestrian or other driver who can prove you were at fault;
  • Gets sued by the cyclist, pedestrian or other driver who can’t prove you were at fault, but you must engage the services of an attorney to defend you against a baseless suit;
  •  Watches as their home is inundated by two (2) to ten feet of floodwaters even though you bought your home in a non-Special Flood Hazard Area (SFHA).
  • Owns the sweet and gentle nice old dog walking off the leash who rears up and mauls or takes a bite out of your neighbor’s child;
  • Wonders who stole their new car;
  • Never gets their wedding and bridesmaid dresses because the bridal shop went out of business unannounced, and the owners didn’t return your deposit.

It doesn’t always happen to “The Other Guy or The Other Woman.” It’s also amazing how these types of tragedies frequently happen yesterday, last night or while you were thinking about taking action to put the proper coverage in force.

Can Life’s Tragedies Be Stopped?

You can’t stop life’s tragedies. You can, however, take intelligent, adult steps to control their outcomes using;

  • Life Insurance
  • Disability Insurance
  • Long Term Care Insurance
  • Homeowners Insurance
  • Renters Insurance
  • Co-op Insurance
  • Condominium Insurance
  • Flood Insurance
  • Auto Insurance
  • Personal Umbrella Liability Insurance
  • Wedding Insurance

In over 37 years of helping my clients reach successful life outcomes using insurance and related financial services and products, I’ve realized for me it all comes down to one simple phrase:

“Live Life Fully Covered.”

I would be honored to help you reach your desired outcomes. Call me at 718-489-2218, or reach me by email at eustace@insuremeeg.com .

Let’s work together to make sure you “Live Life Fully Covered.”