Anyone would be surprised or upset if the fees they were quoted by a lender changed by the time they got to the closing table. It happens sometimes, read below to find out why…
Why would the numbers change?
There are several reasons why lenders may misquote their fees when a borrower is beginning the mortgage process.
Some items on the good faith estimate are not under the control of the lender.
They use a reasonable guesstimate for the costs and the final prices have to develop as you get specific on which house you want, the exact closing date, etc. These would be items like the appraisal fee, pro-rated taxes, home inspection fee, or survey fee.
Other things that can cause changes in your quoted rates are the collection of documents to verify income, your credit check, etc. Over the process of the loan as those things develop and get finalized they can alter the amount of your closing costs for your loan.
What it costs you
Typically the cost of changes that come from these causes are small, unless you drastically underestimated the value of the home or over estimated your credit score!
Get more than one quote
Another reason for mortgage fees to change from your good faith estimate is a bit darker. Some lenders will quote low fees to generate business and gradually change those fees as the process moves forward. The best defense against this sort of tactic is knowledge – use lenders that have a high rating with friends & relatives or your REALTOR ®. Get two or three good faith estimates and compare them. If something seems too good to be true it may be, do some research or ask for help.
HUD to the rescue!
The good news is that starting Jan. 1st 2010, lenders will have to quote their borrowers the correct fees from day 1 and will not be able to change their fees as the mortgage process moves forward.
This new legislation is being handed down by the Federal Government (U.S. Department of Housing and Urban Development aka HUD) and strict enforcement is expected. There will be a small window for changes in certain fees that are not lender related such as title insurance.