How to Read a Mortgage Offer with the Help of AI: Eight Prompts from Budget to Closing Disclosure (USA and Poland)

Before we start: provide today’s date, the current average rate for a 30-year fixed mortgage in the USA with the source and date of the reading, and how many business days from the application the lender must provide me with the Loan Estimate form, with a link to the source. If you can’t find something, write “I didn’t find it.”

We are starting the mortgage analysis. Before you calculate anything, remember my context and apply it throughout the conversation:

– Property price: [AMOUNT]. State or country: [STATE]. Purpose: [I live / I rent].
– Down payment: [amount and percentage of price]. Savings after the down payment and closing costs: [AMOUNT].
– Gross monthly income: [AMOUNT], of which fixed: [AMOUNT], variable (bonuses, overtime): [AMOUNT]. Second person on the application: [yes / no, income].
– Monthly obligations visible in the credit report: [car, cards, studies, alimony; amounts].
– Credit score range: [e.g., 700 to 739]. I do not provide a full report.
– Horizon: how many years I realistically plan to stay in this property: [HORIZON]. How many years I plan to pay: [to the end / until sale].
– Tolerance for variable rate: [none / I accept a change in payment of X percent].
– I calculate in currency: [CURRENCY]. If income is in a different currency than the loan, show the impact of a 10 percent exchange rate change on the payment in my currency.
– I settle taxes in: [country]. Do not advise on taxes; indicate where tax affects the result.

Confirm in three sentences how you understand this context. Do not evaluate any offers yet.

You are an independent financial advisor working for me, not for the bank. Based on the context from prompt 0, calculate how much mortgage I can really afford.

RULES
– Each number has a source or is marked as my assumption. List assumptions at the end.
– Take the current rate from a source with a date. Calculate property tax according to county rules for the purchase price, not from the advertisement. Mark insurance as an assumption to be confirmed by the offer.
– Do not say how much the bank will lend me. Say how much I can pay without risk.

RETURN
1. Net budget: income after taxes and contributions (estimate for my state and note that it is an estimate), minus fixed expenses outside of housing, minus savings I want to maintain: [e.g., 10 percent]. Result: amount that can go towards housing monthly.
2. Total monthly cost of housing at price [AMOUNT]: principal and interest payment, tax, home insurance, mortgage insurance if the down payment is below 20 percent, community fees, utilities, maintenance, and reserve for repairs. Sum next to the amount from point 1.
3. Debt-to-income ratio that the bank sees: only the payment with tax, insurance, and community fees plus my obligations from the report, divided by gross income. Write which components of variable income the bank usually considers and which it does not, with a source.
4. Stress test, table: income minus 20 percent; rate plus 2 percentage points (if considering variable); tax plus 20 percent; insurance plus 50 percent; all at once. In each row: housing cost as a percentage of net income and how many months the cushion from prompt 0 will last before falling below [e.g., 3 months of costs].
5. Three property price amounts: safe (housing cost to [e.g., 30 percent] of net income), reasonable, maximum at which the stress test still passes. With each: payment and down payment.
6. What would change these amounts the most: raising the down payment to 20 percent, paying off one obligation, a second income on the application, improving the score by one range. Provide the impact on the payment and the available amount, with a source for the relationship between rate and score.
7. LIST OF ASSUMPTIONS to replace.

This is the same conversation. I am attaching [number] Loan Estimate forms. Compare them on the same basis.

RULES
– Work only on the content of the forms. If any is missing, write that, do not fill in from memory.
– Check if the forms are comparable: the same loan amount, the same type and term, the same date of issuance and rate expiration date. List discrepancies before the table.
– Treat points and lender credits as the price of the rate: show what the offer costs at the same rate, not just at the rate from the form.

RETURN
1. Main table, rows are offers. Columns: rate, actual annual percentage rate, points (amount and percentage), lender credit, costs from section A, from section B, from section C, upfront fees (prepaid interest, insurance, tax to the escrow account), cash to close, payment with mortgage insurance, total interest percentage (TIP).
2. Cost for my horizon [HORIZON] years: sum of payments, points, and fees minus principal paid during that time. Separate table. This is the number by which you rank, not the rate.
3. What is negotiable: fees in section A (lender costs) and C (services I can buy elsewhere). For each item: typical name, amount in each offer, difference between the cheapest and the most expensive.
4. Red flags in the form: prepayment penalty, balloon payment, payment increasing over time, rate lock fee, negative amortization, mortgage insurance without an end date. Quote the field from the form.
5. Rate lock: is it there, until when, how much does it cost to extend. If the expiration date is earlier than the planned closing, state that directly.
6. Ranking by cost for my horizon, with one sentence justifying each offer. Separately: how the ranking would change if I stayed in this loan for 30 years.
7. Six questions for each lender, such that the answer is a number or yes/no.

This is the same conversation. Compare loan types for my context. Numbers, not descriptions.

RULES
– For each variant, take the current rate from a source with a date. If you cannot find a rate for a variant, write that and do not make it up.
– Calculate everything for my horizon [HORIZON] years and separately for the full term.

RETURN
1. Variant table: 30-year fixed, 15-year fixed, variable [e.g., 7/6] with a fixed period longer than my horizon, variable with a shorter one, FHA if my down payment is below the threshold for a conventional loan, VA if I am eligible. Columns: rate, payment, mortgage insurance monthly and upfront, when insurance disappears and on what basis, principal paid after [HORIZON] years, cost for my horizon, cost for the full term.
2. Variable rate: for each variant, provide the index, margin, first change limit, subsequent change limit, total limit. Calculate the payment in the worst-case scenario after the fixed period and state whether it passes the stress test from prompt 1.
3. Points: for the base offer, calculate the breakeven point for each package of points from the Loan Estimate: after how many months will the lower payment pay back the cost of points. Compare with my horizon. Separately: the same amount allocated to a higher down payment instead of points, impact on payment and mortgage insurance.
4. Rate reduction by the seller or developer, if applicable: what exactly it gives, for how many years, how much it costs in the property price, whether it’s better to take a price reduction.
5. Taxes: whether the interest on this loan will be deductible for me, to what extent and under what condition; source: IRS publication. Note that this is to be confirmed with an accountant.
6. Fit to horizon: one sentence per variant, why it fits or does not fit to [HORIZON] years and my tolerance for variable rate. No recommendation for one variant.

This is the same conversation. For the offer that won the ranking in prompt 2, calculate:

1. Annual schedule for the full term: year, payment, interest in the year, principal in the year, balance at the end of the year, cumulative interest. Note the year when the principal in the payment exceeds the interest.
2. Balance and cumulative interest after [HORIZON] years. How much principal I actually paid off, how much went to interest.
3. Prepayments, three variants: fixed monthly [AMOUNT], one annual [AMOUNT], payment every two weeks. For each: shortening the period in months, interest savings, and the same in present value at a risk-free rate with a source. Check in the Loan Estimate if there is a prepayment penalty.
4. Prepayment or investment: the same amount of prepayment in treasury bonds in my currency for my horizon, before tax, with a source for the interest rate and date. Write at what rate of return the prepayment stops being worthwhile, and note that prepayment is certain, while investment is not.
5. Mortgage insurance: in which month the balance reaches 80 percent of the original value (I can request removal) and 78 percent (automatically removed), how much I will pay in total by that time, and how much prepayment from point 3 accelerates this.
6. Refinancing: at what rate and typical refinancing costs (with a source) the breakeven point falls before the end of my horizon. Provide the breakeven rate and months to payback. Separately: how the recalculation of the payment after a one-time prepayment (recast) differs from refinancing and when it makes sense.

This is the same conversation. Now you play against me. Assume I took the loan from prompt 2 and three years later I regret it: the payment overwhelms me or I lost money. Write why.

RULES
– Do not soften. Not a single sentence starting with “on the other hand,” “it’s worth noting,” “nevertheless.”
– Each claim is based on a number from prompts 1 to 4 or on a field from the Loan Estimate. Claims without evidence are discarded.
– No catastrophes. Only what is visible today.

RETURN
1. Five red flags. For each: weight, evidence (field from the form or number from the table), mechanism (through what the payment or cost increases), year when it will hurt.
2. Escrow account: how the annual settlement works, how much the payment will increase if the tax is recalculated after purchase and the insurance premium increases by 30 percent. Source of rules, table with payment today and after adjustment.
3. If variable rate: payment after the first change in the worst-case scenario allowed by the limits from the offer, and whether it passes the stress test from prompt 1.
4. Scenario “I must sell in the third year”: loan balance, selling costs (commissions, fees, with a source for typical rates), price below which I incur a loss. Compare with the purchase price.
5. Scenario “I lose income for six months”: how many months the cushion will last, what options the lender offers in such a situation and on what terms; source: regulator explanations, not forums.
6. Silent cost: how much each thing I neglect costs me annually: unremoved mortgage insurance after 80 percent, unextended rate lock, unused refinancing at the breakeven rate. Amounts from prompt 4.
7. One condition after which this black thesis ceases to apply. Verifiable: field in the document, amount, or date.
8. Three questions you do not know the answers to that would change the picture. For each: whom to ask.

This is the same conversation. I am attaching the last Loan Estimate and Closing Disclosure for the same loan. Compare them line by line.

RULES
– Work only on the content of the documents. Quote the page and field name.
– For each item that increased, write which category it belongs to: cannot increase, can increase up to 10 percent in total, can increase without limit. Provide the source of the rule.
– Do not evaluate whether the loan is good. Evaluate whether the final document matches what was promised.

RETURN
1. Difference table: field, value in Loan Estimate, value in Closing Disclosure, difference, tolerance category, whether there is justification for the change in the documents.
2. Rate, points, lender credit, payment, cash to close: consistent or not. If the rate changed, check the lock date.
3. Items that were not in the Loan Estimate but are in the Closing Disclosure. Each separately, with a question for the lender.
4. Escrow account: initial deposit, monthly contribution, whether the amounts for tax and insurance match what we established in prompts 1 and 5.
5. Transaction summary page: seller credits, deposits, tax settlement between parties. Does the total match the purchase agreement.
6. List for clarification before signing, from most important, with proposed wording for the question and what I do if the answer is unsatisfactory (including the possibility of postponing the closing).

Wrap these steps in one sheet that I will paste into my notes and calendar.

– Maximum payment from prompt 1 and the total maximum housing cost. One sentence explaining why.
– Selected product: lender, type, rate, points, rate lock expiration date, planned closing date. How many days of buffer.
– Three conditions for exiting this offer: event or number after which I cancel or renegotiate (e.g., rate in Closing Disclosure different from locked, closing costs above amount X, appraisal below price).
– Dates for the calendar: end of rate lock, day of receiving Closing Disclosure (three business days before closing), month of requesting removal of mortgage insurance, annual escrow account settlement.
– Refinancing threshold: rate at which I go back to the bank, and cost above which it is not worth it.
– Prepayment: the amount I choose and the condition under which I suspend it (cushion below X months).
– Annual review: three numbers to check (balance to value, insurance premium, tax in the escrow account) and at what values I react.
– One sentence: what I still do not know.

No introduction or summary. Just points.

The mortgage is in Poland, in zlotys. Additional rules:
– My income is in currency: [CURRENCY]. Check if the bank can even grant a loan in zlotys to someone with income in that currency, and how it calculates ability with a buffer for rate increases according to Recommendation S. Source: KNF or bank documents, not forums.
– Compare offers based on the information form that the bank is required to issue before the contract: interest rate (margin plus index or fixed periodically), commission, required and “voluntary” insurances affecting the margin, appraisal costs, prepayment fee and for how many years it applies, actual annual percentage rate, total cost.
– Fixed periodically vs. variable: show the payment for fixed for [e.g., 5 years] and for variable at the current index and at the index higher by 2 and 4 percentage points. Write what happens after the end of the fixed period.
– Bridge insurance until the mortgage is registered in the land and mortgage register and low down payment insurance: amounts, conditions for termination, whether the bank refunds the overpayment after registration.
– Selling additional products (account, card, life insurance): calculate how much the margin reduction is worth for my horizon, how much the products cost, and whether you can resign from them without losing the margin.
– Prepayment and early repayment: conditions from the form, including fees in the first years, with a legal basis for confirmation.
– All amounts in zlotys, with a conversion to [CURRENCY] with the exchange rate and date and the impact of a 10 percent exchange rate change on the payment calculated in my currency.
– Taxes: note that interest is not deductible in Poland for new loans and that income from potential rental is settled according to residency; to be confirmed with an advisor.