Buying a Home in Mid-Michigan? How to Read Your Loan Estimate and Plan Your Cash to Close

Most buyers I work with have a clear number in mind for their down payment. The number that tends to surprise them is everything else: the closing costs, the prepaid taxes and insurance, and the final "cash to close" figure. The good news is that federal rules give you a standard form to see those costs early, compare lenders, and double-check everything before you sign.

Whether you're buying in Fenton, Grand Blanc, Flint, Davison, Flushing, Linden, Holly, Swartz Creek, or anywhere else in Genesee County and the surrounding areas, here's how to read your Loan Estimate and plan your cash so closing day has no surprises.

Your Loan Estimate Arrives Fast

After you apply for a mortgage, the lender must give you a Loan Estimate within three business days. It's a three-page form that shows the estimated interest rate, monthly payment, and total closing costs, along with estimated taxes and insurance and any special features like a prepayment penalty (CFPB: What Is a Loan Estimate?).

Two things to keep in mind:

• It isn't an approval. When you receive a Loan Estimate, the lender hasn't yet approved or denied your loan. It shows the terms they expect to offer if you move forward (CFPB).
• Every lender uses the same form. That makes it much easier to compare offers side by side, and the CFPB recommends requesting Loan Estimates from more than one lender (CFPB: Loan Estimate Explainer).

What's Inside Your Closing Costs

Closing costs are the upfront costs to get your loan and transfer ownership of the property, and they're separate from your down payment (CFPB: Loan Estimate Explainer). Common ones include appraisal fees, tax service fees, title insurance, government taxes, and prepaid items like property taxes, homeowners insurance, and interest until your first payment is due (CFPB: Closing Fees).

Page 2 of the Loan Estimate breaks them into groups. Here's what I tell buyers to look at:

• Origination charges. These are the lender's own upfront fees, such as application, underwriting, and processing fees. Lenders itemize them differently, so compare the total, not the individual line items (CFPB).
• Services you cannot shop for. Third-party services the lender requires and chooses, like the appraisal. If you're using an FHA, VA, or USDA loan, the upfront mortgage insurance premium or funding fee shows up here too (CFPB).
• Services you can shop for. The lender requires these but lets you choose the provider, and the CFPB notes you can save money by shopping. Your lender should give you a list of approved providers (CFPB).
• Prepaids and escrow. You'll usually pay the first 6 to 12 months of homeowners insurance at or before closing, and you'll often put an initial deposit into your escrow account for future taxes and insurance (CFPB). Your insurance company sets your premium, not the lender, so shop your policy early.

Property taxes deserve a closer look in Michigan. Your taxes can change after you buy because the taxable value "uncaps" the year after a sale, and the lender's estimate may be based on the seller's bill. I wrote about that in Property Taxes After You Buy, and it's worth a read before you set your monthly budget.

Title Insurance: Lender's vs. Owner's

Most lenders require you to buy a lender's title insurance policy, which protects the amount they lend. An owner's policy is a separate policy that can protect you if someone later claims a right to the home from before you bought it, like a previous owner's unpaid taxes or a contractor who says they weren't paid (CFPB: Owner's Title Insurance). Who pays for which policy is often worked out in the purchase agreement, so this is something we'll talk through when we write your offer.

Which Costs Can Change Before Closing?

It's illegal for a lender to deliberately underestimate costs on your Loan Estimate, but some costs are allowed to change. The CFPB groups them into three buckets (CFPB: Can My Final Costs Increase?):

• Can't increase at all: fees paid to the lender or mortgage broker (or their affiliates) for required services, required services the lender didn't let you shop for, and transfer taxes.
• Can increase by up to 10% in total: recording fees and required services where you picked a provider from the lender's list.
• Can increase by any amount: prepaid interest, insurance premiums, initial escrow deposits, services from a provider you found yourself off the lender's list, and services the lender doesn't require.

Those limits can reset if there's a "change in circumstances," such as switching loan types, changing your down payment, an appraisal that comes in higher or lower than expected, or income the lender can't document. If costs go over the limits without a valid reason, you're entitled to a refund of the difference (CFPB).

Also check whether your interest rate is locked. If it isn't, it can change at any time, and even a locked rate can change if your application details change or you don't close before the lock expires (CFPB). Page 1 of your Loan Estimate shows whether your rate is locked and until when.

Seller Credits and Lender Credits Aren't Free Money

Asking the seller to cover part of your closing costs can be a smart move, especially when cash is tight. Just know the CFPB points out that a seller will usually want a higher price to cover that credit, and a lender credit typically comes with a higher interest rate or a larger loan amount (CFPB: Closing Fees). Sometimes that trade is worth it. We'll run the numbers together so you can decide.

If you're a first-time buyer, down payment help may also be an option. Here's my guide to MSHDA's MI 10K down payment assistance.

Plan Your Cash to Close

Your Estimated Cash to Close is the number to plan around. It includes your down payment and closing costs, minus any earnest money deposit you've already paid, any seller credits, and other adjustments. You'll usually pay it by cashier's check or wire transfer, and your lender will need to document where the money came from (CFPB: Loan Estimate Explainer).

A few habits that keep things smooth:

• Keep your down payment and closing funds in an account you can easily document, and ask your lender early which statements they'll want.
• Check your mail and email for revised Loan Estimates, and ask your loan officer to explain anything that changed (CFPB: Revised Loan Estimates).
• Don't open new credit or miss payments while you're under contract. The CFPB lists a new loan or missed payment among the changes that can let a lender revise your costs (CFPB).

Your Closing Disclosure: Three Business Days to Review

Your lender must give you your Closing Disclosure three business days before your scheduled closing. Use that time to compare it to your most recent Loan Estimate: your loan amount, interest rate, monthly payment, closing costs, and cash to close should all match or be close. If something changed, ask why (CFPB: Closing Disclosure Explainer). Make sure any seller credit we negotiated shows up correctly, too.

Protect Your Closing Funds From Wire Fraud

This one matters a lot. The FBI has reported scammers sending fake emails that pose as a buyer's agent, title company, or attorney with "updated" wiring instructions (CFPB: Mortgage Closing Scams). The CFPB's advice:

• Never follow wiring instructions that come by email. Confirm the account details by phone or in person using a number you already know is correct.
• Don't use phone numbers or links from an email to verify.
• Don't email financial information.
• If you think you've wired money to a scammer, call your bank right away to ask for a wire recall, and file a complaint with the FBI at ic3.gov.

I will never email you changed wiring instructions. If you ever get one that looks like it's from me, call me before you do anything.

Ready to Start Your Search?

Whether you're looking in Fenton, Linden, Holly, Grand Blanc, Flint, Davison, Flushing, Swartz Creek, or nearby in Lapeer, Livingston, or Oakland County, I'll help you understand your numbers from the first Loan Estimate to the closing table. Give me a call at (810) 962-4908.

This post is general information, not legal, tax, or financial advice. Every loan and situation is different. Talk with your lender, and when needed a Michigan real estate attorney or tax professional, about your specific costs.