What Your Loan Estimate Can and Cannot Promise About Cash to Close
Some Loan Estimate fees are locked, some can rise only within a limit and some can change freely. Knowing which is which makes the three-day Closing Disclosure review far more useful.
By Gino Yatouma · 3 min read
Why this matters: Buyers often treat the Loan Estimate's cash-to-close figure as a quote. Parts of it are protected, but prepaid items and escrow deposits can move, sometimes by a lot.
Cover: two disclosure forms under review and a calendar marking a waiting period. Illustration created for mortgage.news; it does not depict a real person, property or document.
Three groups of fees
Federal rules sort Loan Estimate charges by how much they may change at closing. The rule text is in Regulation Z section 1026.19, and the CFPB Loan Estimate guide explains the form.
- Generally cannot increase: the lender's own charges, transfer taxes, and services you were not allowed to shop for.
- Can increase, but by no more than 10% in total: recording fees and third-party services you chose from the lender's list.
- Can change by any amount: prepaid interest, homeowners insurance premiums, initial escrow deposits, and services you shopped for on your own.
Changes also can be allowed after valid changed circumstances, such as a new loan amount or a rate lock, when the lender issues a revised estimate.
Why prepaids and escrow move
Prepaid interest depends on your closing date. Escrow deposits depend on the tax calendar and the actual insurance premium. A later closing date or a higher insurance quote can raise cash to close without any fee breaking a tolerance.
The three-day review
Lenders must provide the Closing Disclosure at least three business days before closing. Certain changes, including an APR that becomes inaccurate beyond a set margin, a change in loan product or an added prepayment penalty, require a new three-day waiting period.
If a rate or fee changed, the CFPB advises asking the lender for the specific reason first. If a rate lock is in place, the rate and points should not change unless something in the application changed.
A side-by-side check
- Compare Loan Terms, Projected Payments and Closing Costs line by line with your latest Loan Estimate.
- Use the Closing Disclosure's comparison table to spot items that exceeded a limit.
- Ask whether any excess over a tolerance will be refunded or credited.
- Confirm the insurance premium and tax figures used for escrow.
- Verify wiring instructions by phone with a known number, never from an email.
The takeaway
Interpretation: the Loan Estimate protects you against surprise fee increases, not against every change in cash to close. The CFPB Loan Estimate guide is worth keeping open during your three-day review.