Every lender has to give you a Loan Estimate on the same three-page form. That standardization is the borrower's best protection, and almost nobody uses it properly.
Page 1: the terms
Loan amount, interest rate, monthly principal and interest, and whether any of them can increase. Check the prepayment penalty and balloon payment boxes. On most residential loans both should say no.
Page 2: the costs
Section A, origination charges. What the lender is charging. Discount points live here, and a low rate with three points is not a low rate.
Sections B and C, services. B is what you cannot shop for, C is what you can. Title and escrow sit in C, and on a California purchase the spread between title companies is real money.
Section F, prepaids. Interest, insurance and taxes collected upfront. These are not lender charges, they are your money going into escrow.
Page 3: the comparison
Cash to Close is the number that matters most.
APR folds fees into a rate so you can compare across offers. A quoted rate of 6.5% with heavy fees can carry a worse APR than 6.75% with none.
Total Interest Percentage shows what you pay over the full term. Sobering, and worth reading once.
The two tricks
Low rate, buried points. Always ask for the par rate quote, meaning zero points, alongside whatever they showed you.
Understated third-party costs. Some lenders estimate title, escrow and recording low so Cash to Close looks better. Those numbers get corrected later. Compare Section A between offers rather than the bottom line.
The honest comparison
Get Loan Estimates from every lender on the same day, since pricing moves daily. Compare Section A and the APR. Ask each one to explain any number you do not recognize.
If a lender resists giving you a Loan Estimate before you formally apply, that tells you something.
About the numbers in this article
Any interest rates, monthly payments, down payment figures and repayment terms shown above are hypothetical examples for illustration only. They are not an offer to lend, not a rate quote, and not a commitment. No rate shown is locked or available on request.
The annual percentage rate will be higher than the note rate, because APR reflects financing costs in addition to interest. Both the rate and the APR you are offered depend on your credit score, loan amount, down payment, occupancy, property type, loan term and current market pricing, and will differ from any example here.
Payment examples show principal, interest, taxes and insurance. Your actual payment may be higher once mortgage insurance, HOA dues, flood insurance or other charges apply. Repayment terms shown are 30-year fixed unless stated otherwise.
All financing is subject to credit approval, income and asset verification, and a satisfactory appraisal. Programs, rates and terms are subject to change without notice, and not all products are available to all borrowers.
Ryan Van Til, NMLS #2732776. Pacific Trust Mortgage, NMLS #2573894. Licensed by the California Department of Real Estate. Equal Housing Opportunity. Your binding terms are those disclosed on your Loan Estimate and Closing Disclosure.