I’m Michael DiVita — DRE #01372066 | NMLS #241655, DiVita Home Finance (DRE #01818285 | NMLS #323700), Tiburon, CA. I’ve been in California mortgage lending since 2000 and founded DiVita Home Finance in 2007. The Loan Estimate is one of the most consequential documents in your home purchase — and most buyers skim it without understanding what they’re looking at, so I walk every client through theirs page by page before they lock. Call (800) 239-1103 with any questions.
What Is a Loan Estimate?
A Loan Estimate (LE) is a standardized three-page form your lender must provide within 3 business days of receiving your complete loan application. It outlines the key loan terms, projected payments, and closing cost breakdown. Every lender uses the same form — which makes side-by-side comparison straightforward when you’re shopping multiple lenders. The numbers are not guaranteed at this stage, but lenders are held to strict tolerance limits on how much costs can increase by closing.
Page 1: Loan Terms and Projected Payments
Loan Terms box (top of page 1): This shows your loan amount, interest rate, and whether the rate can increase. It also discloses whether there’s a prepayment penalty or balloon payment — features rare in California conventional loans but worth confirming. If this section shows “Yes” on either of those, ask why immediately.
Projected Payments section: This breaks down your estimated monthly payment into principal + interest, mortgage insurance (if applicable), and estimated escrow for property taxes and homeowner’s insurance. In Marin County and San Francisco, property taxes alone can add $800–$2,500/month to your payment on a $1.5M–$2M home. Make sure you understand the full PITI (principal, interest, taxes, insurance) — not just the rate.
Page 2: Closing Costs Breakdown
This is the most important page for comparison shopping between lenders. Costs are organized by section:
- Section A — Origination Charges: Lender fees — points, origination fees, underwriting. These vary widely between lenders and are directly negotiable. This is the number to compare when rate-shopping.
- Section B — Services You Cannot Shop For: Appraisal, credit report, flood certification. Costs here are what they are — you can’t negotiate them, but you can compare lender estimates.
- Section C — Services You Can Shop For: Title insurance, settlement/escrow agent, attorney fees. You are legally allowed to use your own provider for Section C services. In California, the buyer typically pays title insurance — expect $1,500–$3,500+ depending on purchase price.
- Section E — Prepaids: Homeowner’s insurance premium, prepaid daily interest from closing to first payment. Same for every lender.
- Section F — Initial Escrow Payment at Closing: Property tax reserves, HOI reserves. Same regardless of lender.
- Section G — Other: HOA dues (if applicable).
Cash to Close at the bottom of page 2 is the number you need liquid on closing day (typically via wire transfer from a seasoned account). This is your down payment plus closing costs minus any lender credits. This is the number to plan your bank account around.
Page 3: Comparisons and Key Disclosures
Page 3 includes the Annual Percentage Rate (APR), which is always higher than the interest rate because it incorporates lender fees. The APR is the most accurate single number for comparing total loan cost across lenders when the rate itself is similar. Page 3 also shows the total interest you’ll pay over the life of the loan — a useful benchmark for deciding between a 15-year and 30-year mortgage, or evaluating whether buying points makes sense.
How to Compare Two Loan Estimates
When comparing offers from different lenders: request LEs on the same day (rate shopping within a 45-day window is treated as a single credit inquiry). Focus your comparison on Section A (origination charges), the interest rate, APR, and total cash to close. Some lenders offer a lower rate but load Section A with points — and vice versa. The APR accounts for this and gives you the apples-to-apples comparison.
LE to Closing Disclosure: What Can Change?
The Loan Estimate is replaced by the Closing Disclosure (CD) at least 3 business days before closing. Federal law limits how much certain costs can increase from LE to CD: Section A (lender fees) cannot increase at all; Section B cannot increase at all; some Section C items are subject to a 10% tolerance aggregate cap. Review your CD against your LE line-by-line. If anything has changed significantly, ask your lender to explain before you sign.
Frequently Asked Questions
Do I have to accept the Loan Estimate from the first lender I apply with?
No. Receiving a Loan Estimate doesn’t commit you to anything. You can apply with multiple lenders, receive their LEs, compare them, and proceed only with the one you choose. The key is to apply to multiple lenders within the same 45-day window so that all credit pulls are treated as a single inquiry for scoring purposes. DiVita Home Finance is a mortgage broker, which means we shop your loan across 40+ wholesale lenders to find the best rate and terms — you get the comparison built in.
What should I look for when comparing two California Loan Estimates?
Compare Section A (origination charges), the interest rate, APR, and estimated cash to close. A lower interest rate that comes with high points in Section A isn’t necessarily better — calculate the break-even period to see if paying the points is worth it for your timeline. APR is the single best comparison number because it incorporates fees. Also check that you’re comparing the same loan product (same term, same rate type) — a 5/1 ARM will always show lower numbers than a 30-year fixed, but the risk profile is different.
How much can closing costs increase from the Loan Estimate to the Closing Disclosure?
Section A (lender origination charges) cannot increase at all — zero tolerance. Section B (required services, no shopping) also has zero tolerance. Section C (services you can shop for) is subject to a 10% aggregate tolerance. Other items like prepaid interest and escrow reserves can vary based on actual closing date and current tax amounts. If your Closing Disclosure shows significantly higher costs than your LE in zero-tolerance categories, your lender may be required to issue a lender credit at closing.
Related Resources
- Mortgage Pre-Approval in California — What It Requires
- 5 Mortgage Mistakes California Buyers Make
- Debt-to-Income Ratio for California Mortgages
- Bay Area Home Buying Guide 2026
Talk to Michael Directly
DiVita Home Finance | Tiburon, CA | In lending since 2000, founded DiVita Home Finance in 2007. Michael DiVita DRE #01372066 | NMLS #241655. Company DRE #01818285 | NMLS #323700.
💬 Text: (310) 849-9124
