How to Spot Errors on Your Loan Estimate

When you apply for a mortgage, your lender has to send you a document called the Loan Estimate within three business days. This form is your first real look at the costs of your loan, and it’s important to check it carefully. Lenders are required to give you this estimate in good faith, but mistakes can happen. If you spot errors early, you can fix them before you close on the house. That can save you money and headaches later. Here is what you need to know about finding mistakes on your Loan Estimate.

First, look at the top of the page. Your name, the property address, and the loan amount should be correct. If your name is spelled wrong or the address is off, that’s an easy fix, but it could cause problems with the paperwork later. Double-check the loan type, too. Is it a conventional loan, an FHA loan, or something else? If the box is checked for the wrong program, your whole loan terms might be different from what you expected.

Next, go to the section called “Loan Terms.” This part shows the big numbers: your loan amount, interest rate, monthly principal and interest payment, and whether the rate can change. Make sure the interest rate matches what you discussed with your loan officer. If it’s higher, ask why. Also check the “Total Monthly Payment” box, which includes taxes, insurance, and any mortgage insurance. Some lenders forget to include estimated taxes or insurance, giving you a lower monthly payment than you’ll actually pay. That can be a costly surprise after closing.

Now move to “Projected Payments.” This table shows your payments for the first few years and later years. If your loan has an adjustable rate, the payments shown here should clearly reflect when the rate changes. Look for any jump in the monthly payment that seems too big or too small. Also check the amount of mortgage insurance if you have less than a 20% down payment. That insurance premium might be listed as a separate line item. If it’s missing, you need to ask if it’s included somewhere else or if you were quoted a lower price by mistake.

The “Costs at Closing” section is where most errors hide. This part lists the lender fees, third-party fees like appraisal and title insurance, and prepaid items like property taxes and homeowners insurance. Be suspicious of any fee that seems unusually high or low compared to what you were told. For example, the “Origination Charges” box should show the lender’s fee, points, and any other upfront costs. If you agreed to pay zero points, but the estimate shows a dollar amount for points, something is off.

Check the list of “Services You Can Shop For.” These are services like the title search, settlement agent, or pest inspection. You have the right to choose your own provider for these services, so if the lender picked someone and you want to shop around, you can. But the estimate should clearly state which services you can shop for and which you cannot. If the column says “required” for a service that you know is optional, ask about it.

Another common error involves the “Lender Credits” or “Seller Credits” lines. If you were promised a credit from the seller or a discount from the lender for a higher interest rate, that amount should be listed. If it’s missing, you’re not getting that benefit. Likewise, look at “Adjustments and Other Credits.” This is where earnest money you already paid should be shown as a credit toward your closing costs. If it’s not there, your closing costs could be higher than necessary.

Finally, notice the “Comparisons” section at the bottom. It gives you the APR and the total interest percentage. The APR is a broad measure of loan cost, including fees and points. If your APR is much higher than the interest rate, it might mean the fees are heavy. Compare this number to other Loan Estimates you receive from different lenders. A big difference could mean a mistake in the numbers.

If you find an error, do not ignore it. Call your loan officer and ask for a corrected Loan Estimate. By law, the lender must give you an updated version if the mistake changes the loan terms or costs. Keep copies of all versions. Even small mistakes like a wrong date can cause delays. Remember, the Loan Estimate is not a final bill, but it is your best tool to understand what you are signing up for. Taking ten minutes to check each number can protect you from paying thousands of dollars more than you agreed to.