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Loan Estimate: How accurate is the estimate of mortgage closing costs?

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Don't get blindsided by surprises. Some of these fees have to be dead-on, some don't.

It's Holden again. The Loan Costs subsection on Page 2 will show you the lender's origination charges, third-party service costs, and any fees from title searches, pest inspectors, title agents and escrow agents.

Subsection A, the lender's charges. These can't change and they will be totally accurate.

Section B, third-party fees. You can't shop these fees but know they won't be higher than listed at closing.

Section C, fees you can shop for. The fees in this group will be close. What you actually pay can't exceed the section total by more than 10%.

This section will really help you see what's down the road.
Poor Charlie, can't catch a break.

The Loan Estimate is required to be fairly accurate. Some fees have to be right on the money. With some other fees, lenders have some leeway to charge more than estimated. Here's a summary:

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The lender's origination charges have to be accurate. At closing, these fees can't exceed what was on the Loan Estimate. These fees are listed in subsection A in the "Loan Costs" section on Page 2.

Loan Estimate form, page 2

At closing, the charge for any fee listed in these sections cannot exceed what was listed here in the Loan Estimate.

Charges for 3rd-party services that you can't shop for can't exceed what was on the Loan Estimate. These services may include the appraisal, credit report, flood certification, flood monitoring, tax monitoring, tax status research and others. These fees are listed in subsection B in the "Loan Costs" section on Page 2.

Loan Estimate form, page 2

At closing, the total charges for all the fees listed in this section cannot exceed the estimate by more than 10%.

There is a group of fees that, when added together, may exceed the total in the Loan Estimate by up to 10%, but no more than that. These charges include recording fees, plus services that you shopped for, using the lender's written list of service providers. These services may include the survey, pest inspection, title search, title insurance and title agent or escrow agent.

When you add all of the fees in this group together, the amount you pay can't exceed the amount in the Loan Estimate by more than 10%. Note that this applies to adding all these fees together; it doesn't apply to individual fees.

Some charges don't have an accuracy requirement: prepaid interest, property insurance, escrow payments and any 3rd-party service that you selected, but which was not on the lender's written list of service providers.

Lenders are allowed to charge less than the amounts listed in the Loan Estimate.

Although lenders have some leeway to underestimate some fees, there is little incentive for them to do so deliberately because of the prospect of punitive fines levied by the Consumer Financial Protection Bureau.

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