The mortgage Loan Estimate includes two lists of services involved in the loan process: services you CAN shop, and services you CANNOT shop. Borrowers are free to shop and compare the first list; they may have the lender provide these services, or another part. Borrowers MUST use the lender or listed provider for services on the other list. The CAN shop list might include the following: Pest Inspection Property-Line Survey Title-related services. These might be broken down further: Lenders title policy, protecting the lenders interest in the collateral (usually, the property.) Settlement agent fees, to cover the costs of facilitating the final transaction. Title Search, to document legal ownership of the property. Title Insurance Binder, which allows use of the title search results for a period of time. Fees from providers on the list provided by the lenders are restricted by the Loan Estimate figures; their fees cannot change by more than 10% between estimate and closing disclosure. Providers not on the list are not restricted by the Loan Estimate; the lender is not responsible for changes in their fees or variances from the estimate.

The mortgage Loan Estimate includes two lists of services involved in the loan process: services you CANNOT shop, and services you CAN shop. See the other video in this series on "can shop." The Cannot Shop list covers fees and costs for outside parties (not the lender themselves). This list may include: Tax status research on the property Tax monitoring on property-tax payments Appraisal, which gives the lender a reliable value for the property Credit Reporting on the borrower. Flood Risk fees Flood Zone Monitoring Fees for these services in the Loan Estimate and in the final Loan Disclosure must match. There is ZERO tolerance for change on these items under lender compliance regulations.

This video explains the Loan Costs section of the mortgage Loan Estimate form. Key terms for which figures are provided include: Closing Costs: the set of fees involved in transferring title of the property to the buyer. Origination Charges: fees the lender collects for the mortgage process. These may include fees for handling the application itself, as well as "Origination Fees" — paid by the lender to a party that originates your loan, such as a mortgage broker. Points: essentially, a form of prepaid interest. Points are paid at time of the loan to lower the interest rate of the loan. Points may be tax deductible. Underwriting: fees charged by the lender to evaluate loan risks, based on the transaction and the borrowers financial attributes. The Loan Costs section is usually found on Page 2 of the Loan Estimate.

Lenders provide a Loan Estimate form within 3 business days of application for an approved loan. This form documents the terms, projected payment, costs and other details. These definitions may be helpful in interpretation: Loan Amount: total dollars borrowed, which is not the same as total borrowing cost. Interest Rate: cost you will pay each year to borrow, converted to a percentage rate. Not quite the same thing as: APR (Annual Percentage Rate): this includes interest rate, points (if used), mortgage broker fees, and other charges you pay to get the loan. Monthly Principal & Interest: payment amounts that go to reducing loan principal, and to paying interest, each month. (Mortgage insurance and escrow payments are not included here.) Projected Payments: approximate payment amounts over the years, with the major components such as principal, interest, mortgage insurance, escrow and assessment broken out. Estimated Closing Costs: specific costs to close, detailed. These are directly loan-related costs. Estimated Cash to Close: sum of estimate, plus any other known costs, to provide the total cash needed at loan close.

When an eligible mortgage proceeds to close, lenders are required to deliver a Closing Disclosure form, at least 3 business days before loan consummation. This form details the actual transaction terms and costs to be committed at closing and consummation. The Closing Disclosure must be delivered in writing (digital or paper). The details of the disclosure are specified by Federal guidelines; only the details specified by the CFPB should be included. Should transaction terms or transaction costs change prior to loan consummation, an updated Closing Disclosure should be provided by the lender. This may change the loan consummation deadline in turn, requiring an additional 3-day waiting period, in some cases. Loan closing and loan consummation are not exactly the same thing; although they may occur at the same time in some US States, they are legally distinct. Loan Consummation: borrower becomes contractually obligated to the lender (but not necessarily the seller.) Closing: all parties have committed and signed the necessary documents. The 3-business-day period applies to the gap between delivery of the Closing Disclosure, and legal loan consummation. Lenders will have more information on the specific circumstances that apply to a given transaction in a given US State.

By providing a Loan Estimate, a lender is presumed to have collected the 6 pieces of information required for a loan application. A lender may not claim a change in circumstances if one of the 6 is received after a Loan Estimate is issued. Mortgage settlement charges may be changed from the estimate if other circumstances change. Causes might include: Property costs or closing costs affected by a natural disaster Title insurer goes out of business during underwriting Information on the borrower or the transaction that affects settlement is brought to light. If circumstances change settlement charges beyond the legally-defined tolerance limits, the lender may issue a revised Loan Estimate. a natural catastrophe impacts or harms the residential or commercial property closing expenses the title insurance provider supplying the price quote fails throughout underwriting brand-new info on you or the deal impacting settlement is found. If any of these occasions alter 3rd-party charges beyond the 10% tolerance limitation financial institutions might release a modified Loan Estimate. , if a lender concerns a Loan Estimate they are presumed to have actually gathered all 6 pieces of needed info.. They might not declare a modification in scenarios by getting among these pieces of info AFTER releasing a Loan Estimate.

The Loan Estimate form is generally "binding" — meaning lenders have careful guidelines about meeting the estimates. Revisions of a Loan Estimate are only permitted under defined changes of circumstances. These circumstances include: Extraordinary events that are beyond the control of the borrower or lender Changes or inaccuracies uncovered in the information used by the lender in preparing the Loan Estimate New information identified on the borrower or the transaction Other circumstances that might apply are: Interest rates were NOT locked, and applicable new rates change points or lender credits Settlement delay on new construction loans — typically a 60-day window Borrower requests loan term revisions Borrower waits more than 10 days after the Loan Estimate before deciding to proceed with the loan. If these circumstances affect borrower eligibility or the value of the loan security (such as the property), or increase settlement charges beyond legal tolerance limits, a revised Loan Estimate may be issued.

Final mortgage costs may differ from the loan estimate, but the differences are defined by legal tolerances for some cost categories. For items limited to 10% change tolerance — recording-services charges and non-shoppable 3rd-party services — amounts paid over the Loan Estimate for these categories must be refunded. For all other items, including the services which a borrower is allowed to shop, differences between payment and closing, and Loan Estimate, are not refundable. The lender must arrange refunds within 60 calendar days (NOT business days) of loan consummation.

A mortgage Loan Estimate is just that — an estimate. Your actual loan costs might be higher or lower than the estimate, within certain legally-specified limits for some items, and without defined limits for others. Items with a 10% change limit include: Charges for recording services 3rd-party services on the list provided by the lender Items which might change without legally-defined tolerances: Prepaid Interest Property Insurance Premiums Escrow or Reserve Deposits Items with ZERO tolerance, that should not change: Transfer taxes Fees paid to the lender Fees paid to a mortgage broker, or to affiliates of the lender or the broker. Fees paid to any 3rd parties on the "CAN NOT SHOP" list provided on the Loan Estimate. Compare the Loan Estimate and the Closing Disclosure before loan consummation.

Lenders are required to store transaction records for a number of years. The period differs based on the documents. Escrow Cancellation: 2 years Partial Payment Policy Disclosures: 2 years Loan Estimates: 3 years after loan consummation Closing Disclosures: 5 years after loan consummation If the loan is sold — for example, to a different company for loan servicing — the original lender is only required to provide a copy of the Closing Disclosure to the new owner. Both companies must retain this information, for the remainder of the 5-year period. While digital record storage is common, it is not legally required. The guidelines set for lenders under the TRID regulations do not affect consumer behavior; consumers can keep disclosure records as long as they see fit. .