You call a Realtor. You say, “I’m pre-approved.” The Realtor says, “Great, let’s go shopping.”

That’s the usual conversation. It skips the most important question.

The question is: do you have a Loan Estimate?

This came up on the Randal Jenkins Real Estate Hour when Bill Yingling, team lead of the Yingling Group at LPT Realty, joined me. We were talking about what goes wrong for buyers, and we landed in the same place. The biggest complaints people have about buying a house usually come from two things. Nobody followed up, and the mortgage turned into a nightmare. A lot of that nightmare starts right here.

A pre-approval is not a price

A pre-approval tells you a lender is willing to lend you a certain amount. That’s it. It does not tell you what the loan is going to cost.

A Loan Estimate does. It’s a standard form lenders give you after you apply, and it lays out the interest rate, the monthly payment, the lender’s fees, any points you’re paying, and the cash you’ll need at closing. Because every lender uses the same form, you can lay two of them side by side and compare.

Here’s what most buyers are never told. Those numbers are negotiable.

The rate is negotiable. The lender fees are negotiable. You can shop the same loan with more than one lender and see who gives you the better deal. A pre-approval letter can’t show you any of that. A Loan Estimate can.

What to compare

When you have two or three Loan Estimates in front of you, look at:

• The interest rate, and whether you’re paying points to get it
• The origination and lender charges
• The estimated cash to close
• The monthly payment, including taxes and insurance

Don’t just look at the rate. A low rate with high fees can cost you more than a slightly higher rate with low fees, depending on how long you keep the loan. Ask the lender to walk you through it line by line. If they won’t, that tells you something.

And don’t let fear of your credit score stop you from shopping. Mortgage credit checks done within a short window are generally treated as a single inquiry for scoring purposes.

The surprise at the closing table

Bill made a point I agree with completely. Agents worry about the first impression. The impression that matters most is the last one.

Picture this. You’re at the closing table. The title company slides the numbers across. There’s an amount on there you weren’t expecting. Nobody warned you. Nobody helped you compare. You’re signing anyway because the moving truck is already loaded.

Who do you think that buyer blames? The Realtor, usually. And they’re not wrong to expect more.

I’ve told agents for years that our job is more like air traffic control. We’re told to stay in our lane and let the lender and title company do their thing. But when nobody is watching the fees, the buyer pays for it. Asking about the Loan Estimate early is how you avoid that.

Yes, I’m a loan officer

Full disclosure: I’m a loan officer with American Mortgage Services, and a broker with Florida Real Estate Partners. So take this for what it’s worth.

Shop me too. Get my Loan Estimate and put it next to somebody else’s. If theirs is better, take it. I’d rather you get the right loan than the wrong one from me.

A pre-approval gets you in the door. A Loan Estimate tells you what you’re actually paying.

If you want a second set of eyes on a Loan Estimate you already have, or you want to know what one should look like before you start shopping, call or text me at 727-409-4663. No pressure. Straight answers.

Randal Jenkins
Broker-Owner, Florida Real Estate Partners
Loan Officer, American Mortgage Services, NMLS #2053417
727-409-4663 (409-HOME)