Can My Final Mortgage Costs Increase from What Was on My Loan Estimate?

Lead Hacker
Jan 2
3 min read

Make sure to check your Closing Disclosure to your Loan Estimate, as fees have limitations on what can change. If your final costs exceed the allowable limits without a valid “change in circumstances,” you may be entitled to a refund.

Your Loan Estimate provides an initial overview of the costs associated with your mortgage, but some of these costs can change before closing. While it's illegal for lenders to deliberately underestimate costs on your Loan Estimate, certain circumstances allow for changes in specific costs. Understanding which costs can change and why will help you avoid surprises at closing.

Can My Interest Rate Change?

If Your Rate Is Not Locked: Your interest rate can fluctuate until you lock it.
If Your Rate Is Locked: Even with a locked rate, it can change if:
- Your application information changes.
- You don’t close within the rate-lock timeframe.

To check your rate-lock status, look at the top of page 1 of your Loan Estimate. Learn more about how rate locks work to protect your interest rate.

Categories of Closing Costs

There are three categories of closing costs, and each is treated differently regarding potential changes:

Costs That Can Increase by Any Amount
Costs That Cannot Increase at All
Costs That Can Increase by Up to 10%

When Costs Can Change Without Limits

Certain conditions, known as a “change in circumstances,” allow your lender to adjust closing costs without restriction. Examples include:

You switch to a different loan type or change your down payment amount.
The home appraisal value is higher or lower than expected.
Changes in your credit profile, such as taking out a new loan or missing a payment.
The lender cannot document overtime, bonuses, or other income.

1. Costs That Can Increase by Any Amount

These costs are not under the lender’s control and can change freely:

Prepaid Interest, Property Insurance, and Initial Escrow Deposits: These depend on your closing date and insurance provider.
Fees for Services You Shopped For Independently: If you choose a provider not on the lender’s list, fees may vary.
Fees for Services Not Required by the Lender: Optional third-party services.

2. Costs That Cannot Increase at All

Some costs are strictly regulated and cannot increase unless there’s a “change in circumstances”:

Lender or Mortgage Broker Fees: Charges for required services provided by the lender or broker.
Non-Shoppable Services: Fees for required services that the lender does not allow you to shop for independently.
Transfer Taxes: Charges imposed by your local government.

3. Costs That Can Increase by Up to 10%

For certain costs, the total cannot increase by more than 10% unless there’s a “change in circumstances”:

Recording Fees: Fees for recording your mortgage and deed with your local government.
Shoppable Services Chosen from the Lender’s List: If you select a service provider from the lender’s approved list, these costs are capped at a 10% increase.

What Happens When Costs Change?

Revised Loan Estimate: If a “change in circumstances” occurs, your lender must provide a revised Loan Estimate reflecting the new costs.
Refunds for Overages: If costs exceed the allowable limits and there’s no “change in circumstances,” the lender must refund you the difference.

How to Avoid Surprises at Closing

Understand Rate Locks: Ensure your interest rate is locked, and know the expiration date.
Review Your Loan Estimate: Familiarize yourself with which costs are fixed and which may change.
Ask Questions: Contact your lender for clarification if anything is unclear or unexpected.
Track Changes: Compare your Loan Estimate with your Closing Disclosure, which details final loan costs.

Conclusion

While most mortgage costs are predictable, certain changes are allowed under specific circumstances. By understanding how and why costs may change, you can plan ahead and avoid surprises at closing. If your final costs exceed the allowable limits without a valid “change in circumstances,” you may be entitled to a refund. Always review your loan documents carefully and stay in communication with your lender throughout the mortgage process.