When you apply for a mortgage, the lender must send you a standardized three-page document called the Loan Estimate within three business days. Page 2 is where the closing costs live, broken into labeled sections — A, B, C, and more — that follow the same layout at every lender in the country.
That standardization is the whole point: once you know what each section means, you can lay two Loan Estimates side by side and see exactly where one offer is cheaper than another. Here is how to read the sections that matter most.
Section A: Origination Charges
Section A lists the fees the lender itself charges to make the loan. This typically includes discount points (money you pay up front to buy a lower rate), plus flat fees with names like underwriting, processing, application, or administration.
This is the most important section for comparison shopping, because it is the only part of the form the lender fully controls. A lender cannot pad the appraisal fee to make money, but it can absolutely charge a higher underwriting fee. When people say one lender is "cheaper" than another at the same rate, the difference usually shows up in Section A.
Section B: Services You Cannot Shop For
Section B covers third-party services where the lender picks the provider — most commonly the appraisal and the credit report, and sometimes flood certification or tax monitoring. You pay these costs, but you do not choose who performs the work, so there is little room to negotiate them.
Because these are pass-through costs, big differences in Section B between two lenders are worth questioning, but modest differences are normal.
Section C: Services You Can Shop For
Section C lists services where you are allowed to choose the provider — title services are the big one (title search, lender's title insurance, settlement or escrow fees), and sometimes items like a survey or pest inspection. The lender must give you a list of providers, but you are free to use someone else.
Title-related fees can vary meaningfully between providers, so on a larger loan it can be worth getting a quote or two rather than defaulting to the lender's suggestion.
Lender Credits
A lender credit is money the lender contributes toward your closing costs, shown as a negative number on the form. Credits are usually the mirror image of points: instead of paying up front for a lower rate, you accept a somewhat higher rate and the lender helps cover your costs. Neither choice is automatically better — it depends on how long you expect to keep the loan.
Comparing Two Loan Estimates Apples-to-Apples
To compare offers fairly:
- Match the rate first. Ask both lenders to quote the same interest rate on the same day, since pricing moves daily. Comparing a low-rate/high-cost offer against a high-rate/low-cost offer tells you little on its own.
- Focus on Section A minus lender credits. This "net origination cost" is the truest measure of what each lender charges you.
- Treat B and C as roughly interchangeable. These are third-party costs you would pay with any lender, though you can trim Section C by shopping.
- Ignore prepaids and escrow deposits when comparing lenders — those depend on your taxes, insurance, and closing date, not on who the lender is.
If you are weighing whether a refinance offer actually pays off — including how long it takes the closing costs to break even — you can model it with the free Shouldirefi Analysis Tool, which treats every output as an estimate you can pressure-test against your real Loan Estimates.
All figures are estimates for informational purposes only — not financial advice. Consult a qualified professional before making financial decisions.