Mortgage Quote vs Loan Estimate

What is a mortgage loan estimate?

A loan estimate breaks down different loan costs and what they mean. An LE also shows the total loan amount and estimated monthly payments. To receive an LE, you must apply with a mortgage company and consent to a credit check. The lender uses the information in your application and credit history to put together a custom estimate of loan terms. Given that the lender bases the estimate on real information, loan estimates tend to be more reliable than quotes.   

It’s important to note that what's listed on a mortgage loan estimate is just that, an estimate. The final terms and conditions of the loan may be different. Still, it is more official than a simple quote and thus acts as a better, more reliable comparison tool between lenders. It’s a good idea to review the mortgage loan estimate and ask any questions you may have before deciding which lender to work with.

What's the difference between a quote and a loan estimate?

A mortgage quote is an estimate of the terms and conditions that a lender provides to a potential borrower. It typically includes information about the interest rate, fees and closing costs associated with the loan, as well as the monthly payment and the total loan amount. Lenders base a mortgage quote on what a borrower tells them about their situation.  

A mortgage loan estimate (LE) includes similar information to a mortgage quote, such as the interest rate, fees, and closing costs associated with the loan, as well as the monthly payment and total loan amount. An LE, however, requires an application and a credit check, meaning the information it is based on is more reliable.  

Again, a mortgage quote and an LE are estimates and final loan terms and conditions may differ. The big difference between them is that the LE requires a credit check, which allows a lender to provide a more accurate estimate than with a simple quote. In fact, it requires them to.  

Once the lender receives a completed loan application and sends a loan estimate, there are rules to what costs can change and by how much. The Consumer Financial Protection Bureau (CFPB) provides a list of allowable differences between the estimate and final loan costs. If a lender deliberately underestimates your loan costs, the CFPB has the power to enforce their guidelines.

How do I get a mortgage quote?

Whether you’re online or talking to someone, the steps are similar:

• Gather your financial information: You will need to provide the lender with information about your income, assets, debts, and credit score.
• Reach out to a lender: Some lenders have quote tools online. That can be a good start, but you should still consider reaching out to get into more detail and quickly check multiple scenarios.
• Wait for a mortgage quote: Most quotes are quick, but some take a little longer to pull together. A good lender will deliver them straight to your inbox for you to reference later.

How do I get a mortgage loan estimate?

Here are the steps you can follow to get a mortgage loan estimate:

• Gather your financial information: To apply for a mortgage loan, you will need to provide information about your income, assets, debts, and credit score. This is also a good time to gather any documents you may need. Things like tax returns, pay stubs and bank statements.
• Shop around for lenders: It’s a good idea to compare mortgage loan estimates from multiple lenders to get a sense of the range of options available to you and to help you make an informed decision about which lender to work with.
• Submit a mortgage application: Once you have identified a lender you would like to work with, you can submit a mortgage application. A CapCenter application is 100% online and takes 15 minutes or fewer.
• Wait for a mortgage loan estimate: After you submit your mortgage application, we’ll review your information, run credit and provide you with a mortgage loan estimate. We’ll get you an estimate as quickly as possible. Legally, we’re required to provide one within three business days after receiving a full application.

How do I compare mortgage quotes?

Still, there are some key things to find for comparison:  

• Interest rate: The interest rate is the amount you will pay for borrowing money from the lender.
• Fees and closing costs: These are costs associated with obtaining the mortgage loan and closing on the property.
• Loan terms: Loan terms refer to how long you will have to pay off the mortgage loan. A shorter loan term will typically result in higher monthly payments, but you will pay less interest over the life of the loan. A longer loan term results in lower monthly payments, but you will pay more interest over the life of the loan.
• Total loan amount: Make sure you’re comparing quotes for the same amount of money. If there is a difference, ask the lender to explain why. Other features: Some mortgage quotes may include additional features, such as the ability to make additional payments or the option to switch to a different type of mortgage loan in the future. It’s a good idea to consider these features and how they may affect your decision.
• Other features: Some mortgage quotes may include additional features, such as the ability to make additional payments or the option to switch to a different type of mortgage loan in the future. It’s a good idea to consider these features and how they may affect your decision.

How do I compare mortgage loan estimates?

Your loan estimate will be a three-page document, including:

• Loan Terms: This section includes your loan amount, interest rate and monthly principal and interest payment. It also states whether the loan contains a prepayment penalty or a balloon payment.
• Projected Payments: Here you’ll find your total monthly payments including principal, interest, mortgage insurance and estimated escrow.
• Cash at Closing: This section shows an estimated total for closing costs and cash due at closing, which includes things like a down payment.
• Closing Cost Details: Page 2 of your LE breaks down your closing costs into Loan Costs, Other Costs and Cash to Close.  

The bottom line

Mortgage quotes do not require you to apply. Loan officers can draw one up with minimal information and just a brief conversation. A loan estimate will require an application and at least an initial underwriting.  

The loan estimate is therefore slightly more reliable than the quote, meaning you should expect less change between the loan estimate and the final terms of your loan. A loan estimate is a standardized document required by the Consumer Financial Protection Bureau (CFPB). They’re designed to help you easily compare one lender or offer against another. A mortgage quote may look vastly different depending on the lender, making it more difficult to make an apples-to-apples comparison.