Can my final mortgage costs increase from what was on my Loan Estimate?
Some mortgage costs can increase at closing, but others can't. It is illegal for lenders to deliberately underestimate the costs on your Loan Estimate. However, lenders are allowed to change some costs under certain circumstances.
If your interest rate is not locked, it can change at any time. Even if your interest rate is locked, your interest rate can change if there are changes to your application information or if you do not close within the rate-lock timeframe. Check at the top of page 1 of your Loan Estimate to see whether your rate is locked, and until when. Learn more about how rate locks work.
There are three categories of closing costs. Some closing costs the lender can increase by any amount, some the lender can increase by up to 10 percent, and some the lender can’t increase at all.
However, under certain circumstances these rules do not apply. For example, your lender is allowed to change your closing costs without restriction if:
- You decided to get a different kind of loan or change the amount of your down payment;
- The appraisal on the home you want to buy came in higher or lower than expected;
- You took out a new loan or missed a payment and that has changed your credit; or
- Your lender could not document your overtime, bonus, or other income.
These types of situations are called a “change in circumstances.”
Costs that can increase by any amount
These costs are not controlled by the lender, and can increase by any amount at any time:
- Prepaid interest, property insurance premiums, or initial escrow account deposits
- Fees for services required by the lender that you have shopped separately for, if you choose a service provider that is not on the lender’s written list of providers
- Fees for third-party services that the lender does not require
Costs that cannot increase at all
If there is a “change in circumstances,” these costs can change by any amount, but otherwise they cannot change at all:
- Fees paid to the lender, mortgage broker, or an affiliate of either the lender or mortgage broker for a required service
- Fees for required service that the lender did not allow you to shop separately for, when the provider is not affiliated with the lender or mortgage broker
- Transfer taxes
Costs that can increase by up to 10 percent
If there is a “change in circumstances,” these costs can change by any amount. If there is no change in circumstances, then the total of these costs cannot increase by more than 10 percent:
- Recording fees
- Fees for required services when you have chosen a third-party service provider on the lender’s written list of providers (if the provider is an affiliate of the lender, the cost cannot change at all)
What happens when the costs change?
If your application has a “change in circumstances,” you will likely receive a revised Loan Estimate. If the costs have increased more than the allowed limits and your application has not had a “change in circumstances,” you are entitled to a refund of the amount above the allowable limits.
You won’t receive a Loan Estimate or Closing Disclosure if you applied for a mortgage prior to October 3, 2015, or if you're applying for a reverse mortgage. For those loans, you will receive two forms – a Good Faith Estimate (GFE) and an initial Truth-in-Lending disclosure – instead of a Loan Estimate. Instead of a Closing Disclosure, you will receive a final Truth in Lending disclosure and a HUD -1 Settlement Statement. If you are applying for a HELOC, a manufactured housing loan that is not secured by real estate, or a loan through certain types of homebuyer assistance programs, you will not receive a GFE or a HUD-1, but you should receive a Truth-in-Lending disclosure.
If you have a problem with your mortgage lender, you can submit a complaint with the CFPB online or by calling (855) 411-CFPB (2372). We’ll forward your complaint to the lender and work to get you a response, generally in 15 days.