Why Loan Estimates and Closing Disclosures May Not Match

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When you apply for a mortgage loan, your lender has three business days to provide you with your loan estimate—a detailed summary of the loan terms, fees associated with taking out a mortgage, the loan amount, interest rate, and monthly payments—including estimates for property taxes, homeowner’s insurance, and mortgage insurance, if applicable.

The reason it’s called a loan estimate is that between the time you applied for your loan and when you close escrow on your new home, the data the lender has can change as it goes through the underwriting process which may cause the closing disclosure to show higher costs or a higher interest rate than you may be expecting. 

According to Rocketmortgage.com, you should receive your closing disclosure three days before the closing date. This is a final accounting of all your closing costs. Compare the numbers line by line with the loan estimate and if you find a discrepancy, contact your lender for the reason why.

Sometimes, the closing disclosure will be lower than the loan estimate when a lender overestimates some items, but typically, they’re more. Some costs aren’t allowed to change, including loan origination fees, fees paid to the lender’s third-party service providers, and transfer taxes, which are typically paid by the seller. Costs that can change include prepaid interest between closing and the end of the month. Last, there are costs that have limits on how much they can change, including mortgage recording fees and some third-party services.