How to Read a Loan Estimate for a New York Home Purchase

New York does not replace this federal form with a separate state Loan Estimate. A buyer financing a New York home may see New York taxes, title services, attorney charges and local property-cost estimates inside the federal layout. Those figures belong to the transaction, but the form and its core labels come from federal Regulation Z.

What is the fastest way to read a Loan Estimate?

Use a five-pass review:

1. Identity pass: confirm the borrower, property, sale price, lender, loan type and date issued.
2. Risk pass: find rate-lock status, adjustable terms, interest-only periods, prepayment penalties and balloon payments.
3. Payment pass: compare principal and interest with the estimated total monthly payment and note every cost that is not escrowed.
4. Cash pass: trace page 2 from Sections A through J, then reconcile the down payment, deposit, credits and estimated cash to close.
5. Comparison pass: use page 3 to compare five-year cost, annual percentage rate, total interest percentage and servicing information.

The memory line is:

Page 1 tells you what the loan does. Page 2 tells you where the money goes. Page 3 helps you compare and question it.

Official source map

The New York State Department of State Real Estate Salesperson 77-Hour Curriculum places mortgage disclosures, the Loan Estimate, lender evaluation, closing costs and related finance concepts in Subject 5, Real Estate Finance. The Department of State does not publish a scored allocation for this form.

The current legal content of the Loan Estimate appears in Regulation Z section 1026.37. Timing, early-fee limits, good-faith cost rules and revised estimates are mainly addressed by Regulation Z section 1026.19.

The Consumer Financial Protection Bureau, or CFPB, provides a current interactive Loan Estimate explainer and a printable three-page sample. Its Loan Estimate comparison guide explains which figures are most useful when offers come from different lenders.

This article uses those sources to teach document reading. The separate RESPA and TRID lesson owns the complete application, delivery, tolerance, revision and Closing Disclosure sequence.

What should a student be able to do after this walkthrough?

You should be able to:

• identify the purpose of each Loan Estimate page;
• confirm the loan term, purpose, product and type;
• determine whether a rate is locked and when the lock or cost estimate expires;
• separate loan amount, sale price and down payment;
• distinguish interest rate, annual percentage rate and total interest percentage;
• distinguish principal and interest from the estimated total monthly payment;
• find mortgage insurance, escrow and non-escrowed property costs;
• recognize a prepayment penalty, balloon payment, adjustable rate or interest-only feature;
• distinguish loan costs from other costs;
• read Sections A through J on page 2;
• explain the difference between points and lender credits;
• explain the difference between closing costs and cash to close;
• reconcile deposits, seller credits and other credits;
• use the five-year comparison figures;
• distinguish a lender from a servicer;
• explain what a receipt signature does and does not mean;
• compare two estimates on equivalent terms; and
• identify the questions a buyer should send to the lender or closing professional.

Is a Loan Estimate a loan approval or commitment?

No. A Loan Estimate describes proposed terms and estimated costs based on the information reasonably available when the creditor issues it. Receiving one does not establish final underwriting approval, a commitment to lend or acceptance of the loan.

The form can arrive before the lender has verified every part of the file. The lender may still review income, assets, debts, credit, appraisal, title, insurance and property eligibility. A rate is locked only if the rate-lock field and the separate lender facts show a lock.

This distinction matters on exam questions. The document is an early comparison disclosure, not a promise that the mortgage will close.

Which mortgages use the Loan Estimate?

The Loan Estimate is used for most covered closed-end consumer mortgage transactions secured by real property or a cooperative unit. It is not the early disclosure for every form of housing credit. Home-equity lines of credit and reverse mortgages use different federal disclosures, for example.

If an exam question merely says that a consumer applied for a typical purchase mortgage secured by a home, the Loan Estimate is usually the intended early form. If the facts identify a reverse mortgage, open-end line or another excluded transaction, read the stated product before choosing the form.

When should the buyer receive it?

For a covered transaction, the creditor generally must deliver or mail the Loan Estimate no later than the third business day after receiving the six pieces of information that form an application for this rule. Those items are the consumer's name, income, Social Security number to obtain a credit report, property address, estimated property value and loan amount sought.

The rule also creates a seven-business-day period between delivery or mailing of the initial Loan Estimate and consummation, subject to a narrow personal-financial-emergency provision. The two rules use different business-day definitions. Use the complete TRID timing guide when a question asks you to count days.

What should you check in the page 1 header?

The top of page 1 identifies the transaction. Check each item against the application and purchase contract.

Date issued

The date issued is the date the form is delivered or placed in the mail. It helps the reader compare market-sensitive offers and determine when estimated closing costs expire. Two estimates issued on different dates may show different rates because the market moved, even if the lenders priced the same product similarly.

Applicants

Confirm every applicant's name and mailing address. A spelling error may be clerical, but it should be corrected. The applicant list is not a statement about who will hold title after closing.

Property and sale price

Confirm the address and the stated sale price. The sale price is not the loan amount. If the transaction is not a purchase, the form uses the property value required by the rule instead of a sale price.

Loan term

The term states the scheduled duration, such as 15 or 30 years. A shorter term often changes both monthly payment and total interest. It does not tell the reader whether the interest rate can change.

Purpose

The purpose may be purchase, refinance, construction or home-equity loan. Purpose affects which comparisons and cash-to-close entries make sense.

Product

The product label describes important payment and rate features. It can identify a fixed-rate loan, an adjustable-rate mortgage, an interest-only period, a step-payment feature or another prescribed structure. Read the product together with the Loan Terms and any Adjustable Interest Rate or Adjustable Payment tables.

Loan type

The form identifies conventional, FHA, VA or another loan type. Loan type can affect mortgage-insurance or program charges, down-payment structure and underwriting rules. It does not tell the reader that one option is best for every borrower.

Use the FHA, VA and Rural Housing Service comparison to review program differences without treating the Loan Estimate as a program approval.

Loan ID number

The loan ID connects all pages to the same file. When comparing a revision with an earlier estimate or later Closing Disclosure, check that the identifiers and transaction facts line up.

Rate lock

The Rate Lock field says yes or no. If yes, it shows when the lock expires. It also identifies when estimated closing costs expire. If no, the interest rate, points and lender credits can change before a later lock.

Avoid inferring a rate lock merely because an interest rate appears in the Loan Terms table. An estimate must disclose a rate even when the rate is not locked.

How do you read the Loan Terms table?

The Loan Terms table puts the main credit features in one place. The right column asks whether an amount can increase after closing. A “yes” deserves an explanation immediately below it.

Loan amount

The loan amount is the face amount the consumer expects to borrow. It is not the sale price, total of payments or amount financed. For a simple purchase, sale price minus total down payment often approximates the base loan amount, but financed program charges or other structural details can affect the relationship.

Interest rate

The interest rate is the rate applied to the unpaid principal under the loan terms. If the rate can change after closing, the form says yes and describes the adjustment. Page 2 may add an Adjustable Interest Rate table.

The interest rate is not the annual percentage rate. The APR appears on page 3 and incorporates specified credit costs into a standardized rate measure.

Monthly principal and interest

This is the scheduled principal-and-interest amount shown by the loan terms. It may change if the loan has an adjustable rate, interest-only period or other payment feature. It does not include every monthly housing cost.

The PITI and mortgage escrow lesson explains why a buyer should not stop at principal and interest.

Prepayment penalty

If the loan has a prepayment penalty, the form says yes and describes the maximum amount and applicable period. The charge concerns early payoff under the disclosed terms. It is different from ordinary interest due through a payoff date.

Balloon payment

A balloon payment is a final payment that is more than twice a regular periodic payment under the federal disclosure definition used here. If present, the table gives the maximum amount and timing. A long amortization calculation paired with a shorter maturity can create this structure.

How do you read the Projected Payments table?

The Projected Payments table shows scheduled payment periods. A simple fixed-rate loan may have one column. A loan with payment changes can have several ranges.

Read down each column:

1. principal and interest;
2. mortgage insurance, if any;
3. estimated escrow;
4. estimated total monthly payment; and
5. the time period for that column.

Then read across the columns to see when and how the payment can change.

Why is principal and interest lower than the total monthly payment?

The estimated total monthly payment can add mortgage insurance and escrowed property costs to principal and interest. The difference can be material. A buyer who budgets from the principal-and-interest number alone may understate the expected monthly outflow.

What does mortgage insurance mean here?

The mortgage-insurance line shows an estimated periodic charge when applicable. It can change or end under the governing loan and insurance rules. Conventional private mortgage insurance has federal cancellation and termination rules that differ from government mortgage-insurance structures.

Use the underwriting, PMI and high-cost loan lesson for the 80 percent request, 78 percent automatic termination and midpoint concepts.

What is estimated escrow?

Estimated escrow is the portion expected to be collected with the monthly mortgage payment for listed property costs. It can include property taxes and homeowner insurance. Escrow is a funding method, not a price freeze. Taxes and insurance premiums can change.

What if an item is not escrowed?

The lower part of the table lists estimated taxes, insurance and assessments and indicates which items are in escrow. A cost marked as not escrowed still exists. The owner may need to pay it directly, perhaps in one or more larger installments.

A low estimated monthly payment can therefore be misleading if a substantial tax, insurance, homeowners-association or assessment cost sits outside escrow.

What does Costs at Closing mean on page 1?

Page 1 gives two headline estimates:

• Estimated Closing Costs: the total shown in Section J on page 2, including loan costs, other costs and lender credits.
• Estimated Cash to Close: the estimated net amount the consumer must provide at consummation after the page 2 calculation accounts for down payment, deposit, credits and other adjustments.

Closing costs and cash to close are not synonyms. Cash to close can include the down payment and subtract money already paid as a deposit. Trace both figures to page 2 instead of judging them from the summary alone.

What is on page 2 of the Loan Estimate?

Page 2 has two jobs. The upper portion classifies estimated closing costs into Sections A through J. The lower portion calculates estimated cash to close. Certain adjustable loans also display an Adjustable Payment table, an Adjustable Interest Rate table or both.

The letter sequence matters:

What belongs in Section A, Origination Charges?

Section A lists amounts paid to the creditor and loan originator for originating and extending the credit. Examples can include application, origination, underwriting, processing, verification and rate-lock fees.

If points are paid to reduce the interest rate, the points line appears first and shows both a percentage of the loan amount and a dollar figure. One point equals 1 percent of the loan amount, but the rate reduction purchased by that point is not fixed across lenders, products or market dates.

Worked points example

A buyer's proposed loan amount is $400,000. Section A shows 1 point paid to reduce the rate.

[ $400{,}000 \times 0.01 = $4{,}000 ]

The point costs $4,000. The form does not by itself show how much the rate would have been without the point. Ask for a comparable zero-point option before evaluating the trade.

Use the discount points and lender charges lesson for additional calculations.

What belongs in Section B, Services You Cannot Shop For?

Section B lists required services for which the consumer cannot choose the provider under the creditor's process. Examples can include an appraisal, credit report, flood determination or tax-status service, depending on the transaction.

“Cannot shop” does not mean the service is performed by the lender or that the fee lacks regulation. It means the consumer does not have the provider choice described by Section C. When comparing lenders, compare the Section B totals because a consumer cannot independently replace those providers to lower the cost.

What belongs in Section C, Services You Can Shop For?

Section C lists required services for which the consumer may select a provider. Title and settlement-related services commonly appear here when the facts support provider choice.

The creditor generally provides a separate written list identifying at least one available provider for each service the consumer may shop for. A consumer may explore another provider, but should confirm that the provider meets the lender's requirements and can meet the transaction schedule.

The estimate is not a provider contract. Verify the service, provider, scope and later final charge.

What is Section D, Total Loan Costs?

Section D is the sum of Sections A, B and C. It is a useful lender-comparison checkpoint because it groups the costs connected to obtaining the loan.

Avoid confusing Total Loan Costs with Total Closing Costs. Section D excludes the Other Costs collected in Sections E through H.

What belongs in Section E, Taxes and Other Government Fees?

Section E includes specified government charges such as recording fees and transfer taxes. Recording fees generally relate to recording and indexing documents. Transfer taxes are treated separately.

For a New York transaction, the responsible professionals determine which state and local charges apply and how the contract allocates them. A salesperson should recognize the category, avoid inventing a live amount and direct a discrepancy to the lender and closing professionals.

What belongs in Section F, Prepaids?

Prepaids are amounts paid in advance rather than charges for creating the loan. The section can include:

• homeowner insurance premium;
• mortgage-insurance premium;
• prepaid interest; and
• property taxes.

Prepaid interest commonly covers the period from consummation through the day before the first full interest period begins. The form can show a per-day amount, number of days and interest rate.

Prepaids are different from the initial escrow deposit. A prepaid insurance premium pays coverage for a stated period. An escrow deposit funds an account that will later pay recurring obligations.

What belongs in Section G, Initial Escrow Payment at Closing?

Section G shows amounts expected to enter the reserve or escrow account at consummation. The form can state a monthly amount and number of months for homeowner insurance, mortgage insurance, property taxes and another escrowed item.

This is not the monthly escrow amount shown on page 1. Page 1 estimates what may be collected with each regular payment. Section G estimates the initial account funding required at closing.

Escrow distinction

Suppose the projected monthly escrow on page 1 is $900 and Section G collects four months of a particular tax reserve. The $900 is part of the recurring estimated payment. The Section G amount is an upfront closing figure used to establish the account. Adding or comparing them as if they cover the same period would be a mistake.

What belongs in Section H, Other?

Section H lists other known amounts connected with the transaction. An optional owner's title-insurance policy may appear here when applicable, along with other contract-related items known to the creditor.

The word “optional” deserves attention. Optional for federal disclosure classification does not resolve every contractual, risk or local-practice question. A buyer should discuss title protection and legal consequences with the buyer's attorney or qualified title professional.

What are Sections I and J?

Section I, Total Other Costs, equals E plus F plus G plus H.

Section J starts with D plus I and then applies lender credits. A lender credit appears as a negative number because it reduces closing costs. The result is Total Closing Costs.

A lender credit is not free money detached from loan pricing. It may be associated with a higher interest rate than another available option. Compare the rate, payment, upfront costs and expected holding period together.

How do you calculate Estimated Cash to Close?

For a purchase transaction, the table commonly starts with Total Closing Costs and then accounts for:

• closing costs financed;
• down payment or funds from the borrower;
• deposit already paid;
• funds for the borrower;
• seller credits; and
• adjustments and other credits.

The signed direction of each line matters. A deposit previously paid to the seller usually reduces the amount still due. A seller credit also reduces the consumer's cash requirement. Closing costs financed reduce current cash but increase the amount financed through the loan structure.

Worked New York purchase example

Assume this simplified estimate:

• sale price: $500,000;
• loan amount: $400,000;
• total down payment: $100,000;
• total closing costs: $15,000;
• contract deposit already paid: $25,000;
• seller credit: $5,000; and
• no financed closing costs or other adjustment.

The estimated cash to close is:

[ $15{,}000 + $100{,}000 - $25{,}000 - $5{,}000 = $85{,}000 ]

The buyer does not bring another $25,000 for the same deposit. The deposit is part of the buyer's total funds and is subtracted because it was paid earlier.

This is a teaching calculation. A live New York closing can include prorations, lender changes, title figures, attorney adjustments and contract-specific credits.

What do the Adjustable Payment and Adjustable Interest Rate tables show?

These tables appear only when the loan features require them.

The Adjustable Payment table can identify:

• interest-only payments;
• optional payments;
• step payments;
• seasonal payments;
• the first payment change;
• later change frequency; and
• the maximum principal-and-interest payment.

The Adjustable Interest Rate table can identify:

• index and margin;
• initial interest rate;
• minimum and maximum rates;
• first and later adjustment timing; and
• limits on rate changes.

Do not merge the two concepts. A rate can change, a payment can change, or both can change. The tables show the contractual mechanics, while the page 1 Projected Payments table shows scheduled payment periods or ranges.

Use the fixed, adjustable, balloon, graduated and straight mortgage guide to review product vocabulary.

What is on page 3 of the Loan Estimate?

Page 3 identifies the lender, loan officer and mortgage broker when applicable. It also provides comparison measures and other considerations about the loan.

Confirm names, contact details and Nationwide Multistate Licensing System and Registry, or NMLS, identifiers. The lender, mortgage broker, loan officer and future servicer may be different entities.

How do you use the In 5 Years comparison?

The Comparisons table gives two five-year figures:

1. total scheduled principal, interest, mortgage insurance and loan costs paid through the stated five-year period; and
2. principal scheduled to be paid off during that period.

Subtract the principal-paid figure from the first figure to estimate the five-year cost made up of interest, mortgage insurance and loan costs under the form's assumptions.

Five-year comparison example

Estimate A shows $132,000 total paid in five years and $42,000 principal paid. Its five-year cost is:

[ $132{,}000 - $42{,}000 = $90{,}000 ]

Estimate B shows $129,000 total paid and $41,000 principal paid. Its five-year cost is:

[ $129{,}000 - $41{,}000 = $88{,}000 ]

Estimate B has a $2,000 lower five-year cost under the displayed assumptions. That comparison does not decide whether it has the preferred payment pattern, cash requirement, rate risk, service quality or closing schedule.

What is APR on the Loan Estimate?

Annual percentage rate, or APR, expresses specified credit costs over the loan term as a rate. It is designed as a comparison measure and is not the note interest rate.

APR can exceed the interest rate because it reflects certain finance charges in addition to interest. A lower APR can be useful evidence when comparing otherwise similar offers, but confirm that the product, term, loan amount, lock status and issue timing match.

What is Total Interest Percentage?

Total Interest Percentage, or TIP, is the total scheduled interest over the loan term expressed as a percentage of the loan amount. It is not an annual rate and does not include the same set of costs as APR.

For example, a TIP of 70 percent means the scheduled interest over the full term equals 70 percent of the loan amount under the form's assumptions. It does not mean the interest rate is 70 percent.

What does Other Considerations tell the borrower?

The section can address:

• appraisal and the right to receive a copy;
• whether another person may assume the loan on the original terms under stated conditions;
• homeowner-insurance requirements;
• late-payment timing and charge;
• the uncertainty of future refinancing;
• whether the lender intends to service the loan or transfer servicing; and
• construction-loan or other required statements when applicable.

These are not decorative notices. They answer practical questions about property valuation, transfer, default cost and who may collect payments after closing.

What does Confirm Receipt mean?

If the form includes signature lines, a signature confirms receipt. It does not require the consumer to accept the loan. If signature lines are omitted, the form states that receiving the form or signing an application does not require acceptance.

An exam question may try to turn a receipt signature into loan acceptance. The correct distinction is simple: receipt is not acceptance, approval or consummation.

Which Loan Estimate numbers should two lenders match before comparison?

A fair comparison starts with equivalent assumptions:

• same loan amount;
• same loan term;
• same purpose;
• same product type;
• same fixed or adjustable structure;
• same loan program;
• same points or lender-credit strategy;
• same lock status and comparable lock period;
• same property and sale price; and
• issue dates close enough to reduce market-timing distortion.

Then compare:

1. interest rate;
2. monthly principal and interest;
3. mortgage insurance;
4. estimated total monthly payment;
5. Section A origination charges;
6. Section B services;
7. Section D total loan costs;
8. lender credits in Section J;
9. estimated cash to close;
10. five-year cost; and
11. APR.

Taxes, insurance and some government or third-party costs are not fully controlled by the lender. If those estimates vary materially, ask why rather than assuming the lowest estimate proves the lowest actual cost.

Does the Loan Estimate show which fees may change?

The form groups services by shopping choice, but it does not print the complete federal tolerance analysis next to each fee. Regulation Z's good-faith framework commonly produces three study categories:

• charges that generally cannot increase from the applicable estimate;
• charges tested under a 10 percent cumulative limit; and
• charges that can change without a numerical tolerance limit when based on the best information reasonably available.

The category depends on who receives the charge, whether the service is required, whether the consumer may shop and which provider the consumer selects. A permitted changed circumstance or another specific revision event can affect the comparison baseline.

Do not label every Section C cost as a 10 percent item without checking provider choice. Avoid assuming a fee may rise merely because the form calls it an estimate. Study the full rule in the RESPA, TRID and disclosure sequence.

When can a Loan Estimate change?

An estimate can be revised when a permitted event affects settlement charges or loan terms. Examples include a qualifying changed circumstance, a consumer-requested change, a rate lock after an unlocked estimate, certain new-construction timing and expiration after the consumer does not indicate an intent to proceed within the applicable period.

A revision does not make every changed amount valid. The lender should be able to identify the reason, affected charge or term and applicable timing. Compare each revised estimate with the earlier version and preserve both.

What should a New York salesperson do with a buyer's Loan Estimate?

A salesperson can support comprehension without acting as the lender, attorney or tax adviser.

Helpful actions include:

• remind the buyer to save every version;
• confirm that the property address and sale price match the deal;
• help the buyer locate contract deposits and seller credits;
• flag a mismatch between the contract and the form for the lender and attorneys;
• encourage comparison of total payment, loan costs and cash to close;
• remind the buyer that non-escrowed costs remain payable;
• coordinate transaction dates with the lender and attorneys;
• avoid interpreting underwriting conditions as approval; and
• refer legal, lending, title and tax questions to the appropriate professional.

The salesperson should not select the mortgage, calculate a binding settlement figure, alter the form or tell the buyer that a particular credit term is legally valid.

What questions should a buyer ask after reading the form?

Use specific questions:

1. Is my rate locked? If so, what expires and when?
2. Why does the product differ from what I requested?
3. Can the interest rate, principal-and-interest payment or loan amount increase?
4. Does the loan include an interest-only period, balloon payment or prepayment penalty?
5. Which items in the total monthly payment are estimates?
6. Which property costs are not escrowed?
7. What does each Section A charge buy?
8. Which Section C services may I shop for, and where is the provider list?
9. Why do your tax or insurance estimates differ from another lender's?
10. Are points buying a lower rate, and what is the comparable no-point option?
11. Is the lender credit associated with a higher rate?
12. How was my deposit entered in cash to close?
13. Which seller credit or contract adjustment is included?
14. What could cause this estimate to be revised?
15. Who currently expects to service the loan?

Clear questions produce better answers than asking only whether the estimate “looks good.”

What are the most common Loan Estimate mistakes?

Mistake 1: Treating the interest rate as APR

The note rate prices interest on principal. APR is a standardized cost measure that includes specified finance charges.

Mistake 2: Budgeting only for principal and interest

The estimated total monthly payment can add mortgage insurance and escrow. Non-escrowed costs remain outside that total.

Mistake 3: Treating closing costs as cash to close

Cash to close can include down payment and subtract deposits, seller credits and other adjustments.

Mistake 4: Counting the contract deposit twice

A deposit already paid generally reduces the remaining funds due. It does not become a new closing payment for the same amount.

Mistake 5: Assuming the displayed rate is locked

The Rate Lock field controls the disclosure. An interest-rate figure can appear on an unlocked estimate.

Mistake 6: Calling every Section A fee a discount point

Only a charge disclosed as points paid to reduce the rate has that meaning. Other origination fees can use different labels.

Mistake 7: Calling lender credits free

Credits reduce upfront closing costs and may be paired with different interest-rate pricing.

Mistake 8: Assuming escrow fixes taxes and insurance

Escrow changes payment handling. Taxes, premiums and assessments can change.

Mistake 9: Comparing estimates with different assumptions

A 15-year fixed loan cannot be fairly compared with a 30-year adjustable loan by APR alone.

Mistake 10: Treating receipt as acceptance

A signature, when used, confirms receipt. It does not accept the loan.

Mistake 11: Assuming a low tax estimate is a lender discount

The lender does not set New York property taxes. A low estimate may simply understate the future cost.

Mistake 12: Ignoring page 3

Page 3 contains five-year costs, APR, TIP, late-payment terms, assumption and servicing information that can change the comparison.

How do you solve Loan Estimate exam questions quickly?

Follow this order:

1. Name the page. Terms and projected payments are page 1. Detailed costs and cash are page 2. Comparisons and other considerations are page 3.
2. Name the number. Is the question asking for rate, APR, payment, costs or cash?
3. Name the relationship. Does one figure add to or subtract from another?
4. Check timing separately. If days matter, identify the business-day definition.
5. Reject document overclaims. The estimate is not approval, acceptance or a final Closing Disclosure.

Practice questions

Question 1

A buyer receives a Loan Estimate showing a 6.25 percent interest rate. The Rate Lock field says “No.” Which statement is correct?

A. The displayed rate is locked because it appears in Loan Terms B. The rate, points and lender credits can change before a later lock C. The creditor cannot issue an estimate before locking the rate D. The buyer has accepted the displayed rate

Answer: B. A displayed rate does not establish a lock. Read the Rate Lock field.

Question 2

Which page 1 figure is most likely to include principal and interest, mortgage insurance and escrow?

A. Loan Amount B. Interest Rate C. Estimated Total Monthly Payment D. Estimated Closing Costs

Answer: C. The total monthly estimate combines the listed periodic components.

Question 3

Property taxes are marked “No” under the escrow indicator. What does that mean?

A. The owner owes no property tax B. The tax is included in principal and interest C. The owner may need to pay the tax directly D. The lender has waived the tax

Answer: C. A non-escrowed property cost remains payable outside the regular escrow collection.

Question 4

Where are points paid to reduce the interest rate generally shown?

A. Section A, Origination Charges B. Section E, Taxes and Other Government Fees C. Section G, Initial Escrow Payment at Closing D. Other Considerations

Answer: A. Points appear first in Origination Charges when applicable.

Question 5

A $300,000 loan includes 0.5 point paid to reduce the rate. What is the point charge?

A. $150 B. $1,500 C. $3,000 D. $15,000

Answer: B. $300,000 multiplied by 0.005 equals $1,500.

Question 6

Which section lists required services for which the consumer may choose a provider?

A. Section A B. Section B C. Section C D. Section F

Answer: C. Section C is Services You Can Shop For.

Question 7

What is Section D?

A. A plus B plus C B. E plus F plus G plus H C. D plus I before lender credits D. Sale price minus loan amount

Answer: A. Section D is Total Loan Costs.

Question 8

Which section commonly includes prepaid interest?

A. Section B B. Section F C. Section G D. Section J

Answer: B. Prepaid interest belongs in Prepaids.

Question 9

What is the difference between page 1 estimated escrow and Section G?

A. There is no difference B. Page 1 is recurring estimated escrow, while Section G is initial escrow funding at closing C. Page 1 covers title fees, while Section G covers points D. Section G is the interest rate

Answer: B. One is periodic; the other is upfront account funding.

Question 10

Total closing costs are $12,000, down payment is $80,000, deposit already paid is $20,000 and seller credit is $4,000. With no other entries, what is estimated cash to close?

A. $68,000 B. $76,000 C. $88,000 D. $116,000

Answer: A. $12,000 plus $80,000 minus $20,000 minus $4,000 equals $68,000.

Question 11

Why does a lender credit appear as a negative number in Section J?

A. It reduces estimated closing costs B. It increases the loan amount automatically C. It cancels the down payment D. It is a refund of principal

Answer: A. Lender credits reduce the closing-cost total shown there.

Question 12

The five-year section shows $140,000 total paid and $50,000 principal paid. What is the displayed five-year cost of interest, mortgage insurance and loan costs under the comparison method?

A. $50,000 B. $90,000 C. $140,000 D. $190,000

Answer: B. $140,000 minus $50,000 equals $90,000.

Question 13

Which statement correctly describes TIP?

A. It is the annual interest rate B. It is the closing-cost percentage C. It is total scheduled interest over the loan term as a percentage of the loan amount D. It is the property-tax rate

Answer: C. TIP is a lifetime-interest comparison measure, not an annual rate.

Question 14

What does a consumer's signature in Confirm Receipt establish?

A. Final underwriting approval B. Acceptance of the loan C. Receipt of the disclosure D. Transfer of title

Answer: C. The signature confirms receipt only.

Question 15

A New York buyer sees a property-tax estimate far below another lender's estimate for the same property. What is the best response?

A. Select the lower estimate because the lender controls the tax B. Ask both lenders to explain the assumptions and verify the tax information C. Treat the difference as a seller credit D. Remove taxes from the comparison

Answer: B. Property taxes are not set by the lender. Investigate the underlying estimate.

What is the one-minute Loan Estimate review?

• The Loan Estimate is a three-page federal early mortgage disclosure.
• It is not final approval, loan acceptance or the Closing Disclosure.
• Page 1 shows transaction identity, terms, payment projections and headline cash figures.
• The Rate Lock field, not the presence of a rate, tells you whether a lock is disclosed.
• Principal and interest can be lower than the estimated total monthly payment.
• Non-escrowed costs still must be paid.
• Page 2 uses Sections A through J for closing costs.
• D equals A plus B plus C.
• I equals E plus F plus G plus H.
• J combines D and I and applies lender credits.
• Closing costs are not the same as cash to close.
• A prior deposit and seller credit generally reduce remaining cash due.
• Page 3 shows five-year comparisons, APR, TIP and other considerations.
• APR is not the interest rate.
• TIP is not an annual percentage.
• A receipt signature does not accept the loan.
• Compare offers with equivalent product, amount, lock and timing assumptions.

Frequently asked questions

What is a Loan Estimate?

A Loan Estimate is a three-page federal disclosure showing proposed mortgage terms, projected payments, estimated closing costs, estimated cash to close and comparison information.

Is there a separate New York Loan Estimate form?

No. New York home purchases generally use the federal Loan Estimate for covered transactions. New York-specific transaction costs can appear within it.

Is a Loan Estimate a mortgage approval?

No. It is an early disclosure and comparison document. Underwriting and property review can remain incomplete.

How many pages does a Loan Estimate have?

The standard Loan Estimate has three pages, with permitted addenda in circumstances allowed by the rule.

What is on page 1 of a Loan Estimate?

Page 1 contains general transaction information, Loan Terms, Projected Payments and Costs at Closing.

What is on page 2 of a Loan Estimate?

Page 2 itemizes Loan Costs and Other Costs in Sections A through J and calculates Estimated Cash to Close. Adjustable-loan tables can also appear.

What is on page 3 of a Loan Estimate?

Page 3 identifies loan participants and provides five-year comparisons, APR, TIP, other considerations and a receipt section.

Does an interest rate on the form mean it is locked?

No. Check the Rate Lock field. An unlocked estimate still displays an interest rate.

What is the difference between interest rate and APR?

The interest rate applies to principal under the note. APR expresses specified borrowing costs over the term as a standardized rate.

What is the difference between closing costs and cash to close?

Closing costs are the Section J cost total. Cash to close also reflects down payment, deposits, seller credits, financed costs and other adjustments.

Where is the down payment on a Loan Estimate?

The Calculating Cash to Close table on page 2 includes Down Payment/Funds from Borrower for a purchase transaction.

Where is the contract deposit shown?

The page 2 cash-to-close table shows the deposit as an amount that reduces funds still due when entered as expected.

Where are lender credits shown?

Lender credits appear in Section J as a negative amount that reduces estimated closing costs.

Where are discount points shown?

Points paid to reduce the interest rate appear in Section A, Origination Charges, as a percentage and dollar amount.

What does Services You Can Shop For mean?

It means the lender requires the service but permits the consumer to choose an eligible provider under the applicable process.

What is TIP on a Loan Estimate?

TIP is total scheduled interest over the loan term expressed as a percentage of the loan amount. It is not an annual rate.

How do I compare the five-year cost of two Loan Estimates?

For each offer, subtract principal paid in five years from the first In 5 Years total. Compare equivalent loan structures and assumptions.

Does signing a Loan Estimate accept the mortgage?

No. A signature in the receipt section confirms that the consumer received the form.

Can Loan Estimate costs change?

Some estimates can change. Federal good-faith, tolerance and revision rules control whether a change is permitted and which baseline applies.

Who should explain a Loan Estimate error?

Ask the creditor or loan officer about loan terms and estimates. Include the buyer's attorney or closing professional when the issue concerns the contract, title, allocation or legal effect.

What should you study next?

Read the RESPA, TRID, Loan Estimate and Closing Disclosure guide for delivery and revision rules. Then use the PITI and escrow lesson for payment analysis and the points and loan charges lesson for rate-cost tradeoffs.

The next exact queue item is NY-D05, How to Read a Closing Disclosure. You can also try the free 19-subject sampler. It is an equal-subject study sample, not an official exam distribution or pass predictor.

Sources and verification notes

This walkthrough was checked against the following primary and official sources on August 27, 2026:

1. New York State Department of State, Real Estate Salesperson 77-Hour Curriculum, Subject 5 coverage of real estate finance, federal mortgage disclosures and closing costs.
2. Consumer Financial Protection Bureau, Regulation Z section 1026.37, current required Loan Estimate content and official interpretations.
3. Consumer Financial Protection Bureau, Regulation Z section 1026.19, application timing, early-fee restrictions, good-faith costs, provider lists and revised disclosures.
4. Consumer Financial Protection Bureau, Loan Estimate explainer, current field-by-field consumer guidance and sample form.
5. Consumer Financial Protection Bureau, sample adjustable-rate Loan Estimate, three-page sample showing standard labels and adjustable tables.
6. Consumer Financial Protection Bureau, compare and negotiate loan offers, lender-cost comparison and five-year calculation method.
7. Consumer Financial Protection Bureau, Appendix H to Regulation Z, closed-end model forms and clauses, including Loan Estimate models.
8. Consumer Financial Protection Bureau, Regulation Z section 1026.38, Closing Disclosure content used for the later comparison.
9. Consumer Financial Protection Bureau, current Regulation Z, current version and official interpretations.

Mortgage rates, lender pricing, property taxes, insurance premiums, program charges, title costs and settlement figures can change. Use the most recent disclosure and verify a specific transaction with the creditor, loan officer, servicer, buyer's attorney and other qualified professionals. This article provides independent exam preparation and general education. It is not legal, lending, tax or financial advice, is not affiliated with or endorsed by the New York State Department of State and does not reproduce state exam questions.