Understanding Your Mortgage Loan Estimate

1 Loan Amount & Interest Rate

The top of page 1 shows your loan amount (how much you're borrowing) and your interest rate. This is the advertised rate you qualified for—e.g., 6.5% fixed for 30 years.

Key detail: Check if the rate is fixed or adjustable. If adjustable (ARM), it will say when the rate changes and by how much. Most Nevada buyers choose fixed-rate for stability.

2 Monthly Principal & Interest (P&I)

This is the base payment toward your loan. For example, on a $350,000 loan at 6.5% for 30 years, your P&I is ~$2,212/month. This number never changes on a fixed-rate loan.

The Loan Estimate will also note if the P&I can increase (on ARMs) or if you have a balloon payment due later (rare on conventional mortgages).

3 Mortgage Insurance (if applicable)

If you put down less than 20%, you'll see a monthly PMI charge (Private Mortgage Insurance on conventional loans) or MIP (Mortgage Insurance Premium on FHA loans).

• Conventional PMI: Typically $50-$300/month, drops off automatically at 22% equity
• FHA MIP: Stays for life of loan (if 3.5% down), can only remove by refinancing

Good news: The Loan Estimate will note when/if PMI can be canceled. Learn how to avoid or remove PMI.

4 Estimated Escrow (Taxes + Insurance)

Your lender will collect property taxes and homeowners insurance monthly and pay them on your behalf from an escrow account.

Nevada example: If property taxes are ~$3,000/year and home insurance is $1,500/year, your escrow adds ~$375/month to your payment.

The Loan Estimate shows the first year's escrow amount. Note: This can increase if property taxes/insurance premiums go up—your lender will adjust annually.

Section A: Origination Charges

These are fees the lender charges to process your loan:

• • Origination fee / Points: Typically 0-1% of the loan amount. Some lenders charge 1% ($3,500 on a $350k loan), others charge nothing but give you a slightly higher rate.
• • Application fee: Some charge $300-$500 upfront (often credited at closing).
• • Underwriting fee: $400-$900 to have an underwriter review your file.

Nevada tip: Origination charges are negotiable. If shopping lenders, compare this section—it varies widely. We offer transparent, low origination fees.

Section B: Services You Cannot Shop For

These are third-party services your lender requires, and you must use their chosen provider:

• • Appraisal fee: $500-$700 in Nevada (varies by property type/location).
• • Credit report: $25-$50.
• • Flood certification: $10-$20 (determines if home is in flood zone).
• • Tax service fee: $75-$100 (lender monitors your property taxes).

These fees are fairly standard and non-negotiable, but they should still be reasonable. If an appraisal is $1,000+, ask why (could be a complex property).

Section C: Services You Can Shop For

These are third-party services where you can choose your own provider (though lender will recommend):

• • Title search & insurance: $1,000-$2,000 in NV. Protects against ownership disputes. Shop around for title companies—prices vary.
• • Settlement/escrow fee: $500-$800. The company that handles closing paperwork and funds.
• • Survey (if needed): $300-$600. Verifies property boundaries (not always required).
• • Home inspection: $400-$600. Highly recommended but optional (lenders don't require it, but you should get one!).

Pro tip: The lender's estimate here is often conservative (high). If you shop and find a cheaper title company or inspector, you can save $200-$500. We can recommend trusted Nevada partners.

Section E: Taxes and Other Government Fees

These go to the county/state, not the lender:

• • Recording fees: $50-$200 to file the deed and mortgage with the county.
• • Transfer taxes (if any): Nevada doesn't have a state transfer tax, but some counties charge small fees.

These are fixed by government—no negotiation, but they're usually minor (under $300 total in most NV counties).

Section F: Prepaids

These are costs you'd pay anyway as a homeowner, but they're collected upfront at closing:

• • Homeowners insurance premium: First year paid upfront (~$1,000-$2,000 in NV).
• • Mortgage interest (prepaid): If you close mid-month, you'll prepay interest from closing to month-end. Example: Closing on April 15th = prepay 15 days of interest (~$350).
• • Property taxes (prepaid): If seller already paid current year taxes, you reimburse them a prorated amount.

Prepaids vary by closing date—closing at the end of the month reduces prepaid interest (strategy: negotiate your closing date to minimize this).

Cash to Close

The bottom of page 2 and top of page 3 summarize your total cash needed at closing. This is:

Down payment + Closing costs – Credits = Cash to Close

Example:
Purchase price: $400,000
Down payment (10%): $40,000
Total closing costs: $12,000
Seller credit: -$5,000
Cash to close: $47,000

This is the wire/cashier's check you bring to closing. The Loan Estimate shows an estimate; the final number appears on your Closing Disclosure (received 3 days before closing). Learn more about Nevada closing costs.

APR (Annual Percentage Rate)

Page 3 shows your loan's APR—this is your interest rate plus all lender fees expressed as a yearly rate. It reflects the true cost of the loan.

Example: 6.5% interest rate + $3,500 origination = 6.65% APR. When comparing lenders, compare APRs, not just rates—a lower rate with high fees can cost more than a slightly higher rate with low fees. Full APR explanation here.

Assumption & Prepayment Penalty

Page 3 tells you if someone else can assume your loan (take it over if you sell) and if there's a prepayment penalty (fee for paying off early). Most conventional/FHA/VA loans have no prepayment penalty and are not assumable (VA loans are an exception—often assumable at a low fee).