What the Loan Estimate / Closing Disclosure Explainer actually produces

SECTION A — ORIGINATION FEE ($1,455): This is what the lender charges to process your loan application, verify income/assets, and coordinate the closing. It's based on your loan amount ($485,000) and is non-negotiable with our lender. You cannot shop this fee. SECTION B — APPRAISAL ($650) & CREDIT REPORT ($42): The appraisal is an independent assessment of the property's value ($531,000). Your property appraised above the purchase price, which is positive for your equity position. The credit-report fee covers the pull of your credit history. These are required and you cannot shop them — they're part of our required underwriting. SECTION C — SERVICES YOU CAN SHOP: • Title Search ($375): A title company verifies there are no liens or ownership disputes on the property. You found your own title provider, which is why this fee is lower than our initial estimate. • Title Insurance – Lender ($870): Protects the lender if someone challenges ownership. This is required and varies by title company. • Owner's Title Insurance ($1,240): This protects YOU if an ownership issue arises after closing. This is optional (you can decline it), but most buyers get it. Your provider quoted $1,240. • Settlement/Closing Fee ($595): The title company's closing-day coordination and document preparation. This varies by provider. SECTION F — PREPAIDS (NOT LENDER FEES): • Prepaid Interest (15 days, $1,437): Interest accrues daily on your loan from closing date through the end of that month. This is NOT a fee — it's interest you owe regardless. We collect it at closing for convenience; it flows to your lender's interest account. The number of prepaid-interest days changed from 8 to 15 because your closing date moved. Verify this amount against a loan calculator once you confirm your final rate. • Homeowner's Insurance Premium (12 months, $2,340): You prepay one year of homeowner's insurance at closing. This is a requirement of the lender (to protect the property). Not a fee — an insurance cost you'd have anyway. SECTION G — INITIAL ESCROW DEPOSIT & ONGOING ESCROW: • Homeowner's Insurance Escrow (2 months, $390): This is a cushion deposited into an escrow account. Going forward, your lender will collect ~$195/month from your mortgage payment and set it aside to pay your annual insurance bill when due. • Property Tax Escrow (3 months, $1,815): Same concept — a 3-month cushion deposited now; ongoing monthly tax payments (~$605/month) are collected with your mortgage payment and held in escrow to pay property taxes when due. This protects the lender's collateral. WHAT CHANGED FROM INITIAL LE: Appraisal fee increased $50 (final appraisal fee was higher than estimated). Title fees decreased because you switched to your own title provider (savings of roughly $200–300). Prepaid interest increased because your closing date moved from November 15 to November 22, adding 7 days of accrued interest. TRID TIMING NOTE: This revised LE was issued due to the closing-date change. Per TRID rules, you have 3 business days to review this revised LE before we can issue the Closing Disclosure (the final document). Our closing target is still November 22, which assumes the revised LE is delivered by November 15. Equal Housing Lender.

1. 'The prepaid interest seems high — is there a way to reduce the number of days we prepay?' ANSWER: Prepaid interest is calculated from your closing date through the end of that month; it's not optional. The $1,437 reflects the change in your closing date (from 8 to 15 prepaid days). Once your rate is locked, a calculator will show you the exact daily interest charge. 2. 'Do I need owner's title insurance, or can I skip it to save $1,240?' ANSWER: Owner's title insurance is optional, not required. However, it protects you (not the lender) if an ownership issue surfaces after closing — for example, a previously unknown lien or heir claim. Most buyers get it as protection, especially on a purchase. We can show you what happens without it, but the decision is yours to make. 3. 'Why is there so much going into escrow? Can I pay my taxes and insurance myself instead of through the lender?' ANSWER: Your lender requires taxes and insurance to be paid through escrow to protect the property as collateral. Some lenders offer escrow-waiver options for loans with sufficient equity, but conventional loans at 20% down typically require escrow. We can check if a waiver is available, but there may be a fee.

FLAG 1 — PREPAID INTEREST CALCULATION: Verify the $1,437 prepaid-interest amount against the final rate and closing date. If the rate has not been locked since the revised LE date, confirm this is an estimate and will be updated on the Closing Disclosure. FLAG 2 — TRID 3-DAY PERIOD: This revised LE must be delivered by November 15 to allow 3 business days of review before a November 22 closing (if that is the locked closing date). Confirm with compliance that the revised LE delivery date and the 3-day timeline have been validated. If closing must move to accommodate TRID timing, notify borrower immediately. FLAG 3 — TITLE INSURANCE OPTIONAL PRESENTATION: Ensure the borrower walkthrough clearly states that owner's title insurance is OPTIONAL (not required). The title company must disclose this separately per state law; verify that the title commitment or separate disclosure covers this. FLAG 4 — ESCROW-WAIVER LANGUAGE: The walkthrough suggests escrow waiver 'may be available' but conventional loans typically require it. Remove speculative language or confirm escrow-waiver eligibility with underwriting before sending the explainer. FLAG 5 — CLOSING DISCLOSURE CONSISTENCY: Once the final LE is issued and the CD is prepared, cross-check prepaid interest, escrow amounts, and all title fees against the explainer. Any variance should be explained to the borrower in a follow-up email.